Gold storms to late-June high as traders dump Fed hike anxiety

Gold’s rebound is beginning to look less like a defensive trade and more like a rate-relief move.

Bullion climbed more than 1% on Friday, rising to its highest level since late June, after a soft US jobs report forced traders to trim expectations for another Federal Reserve rate increase.

The dollar’s weekly decline added to the support, while renewed central-bank buying gave investors a reminder that official-sector demand has not disappeared.

Even so, the rally is not without risk. Rate-hike pricing has eased, not vanished, leaving gold exposed if inflation data turns sticky again.

Jobs miss revives the gold trade

Spot gold rose 1.4% to $4,179.94 an ounce in early trading, while August futures gained 1.6% to $4,193.20.

The metal was heading for a 2.3% weekly advance, its first weekly gain in five.

The trigger was Thursday’s US payrolls report.

Nonfarm payrolls increased by 57,000 in June, well below expectations, while the previous two months were revised lower.

The unemployment rate slipped to 4.2%, but that improvement was partly flattered by a drop in labour-force participation.

For gold, the signal was clear enough. The labour market is cooling, and that makes it harder for the Fed to justify an immediate move higher in rates.

Dollar weakness adds fuel

The dollar was on track for a weekly drop, making bullion cheaper for buyers using other currencies.

Traders also cut the implied probability of a September Fed hike to about 54%, from roughly 66% before the payrolls release.

Market analysts said the move reflected a broad pullback in expectations for US tightening through the rest of the year and into early 2027.

That shift matters because gold pays no yield. When rate expectations fall, the opportunity cost of holding bullion also falls.

Still, the repricing has not gone far enough to remove downside risks.

Analysts warn that if inflation data stays firm, gold could face another leg lower later in the year, with some downside scenarios pointing towards the $3,500 area.

Central banks keep buying

A separate support came from reserve managers. The World Gold Council said central banks returned to net buying in May, adding 41 tonnes to official reserves.

Poland and China were among the larger buyers, while Uzbekistan and Kazakhstan also added gold.

That official demand helps cushion gold when speculative flows turn volatile.

It also shows why the metal has remained resilient despite recent pressure from the dollar and rates.

The wider precious-metals complex joined the rebound. Silver rose 2.3% to $62.43 an ounce, platinum gained 2.7% to $1,660.05 and palladium added 1.3% to $1,284.40.

All three were at more than one-week highs and on course for weekly gains.