Gold Hits Year Low as Robust Jobs Data Trump Geopolitical Jitters and Central Bank Stockpiling

Gold falls to $4,352.90 after May jobs report shows 172,000 new jobs, fueling Fed rate hike bets. Central bank buying surges but retail demand plunges, while geopolitical tensions fail to ignite a rally.

The price of bullion has fallen to its lowest point this year, closing the week at $4,352.90 an ounce after briefly dipping below $4,370. The selloff marks a stark disconnect between the metal’s traditional haven status and the current market dynamics, where a red-hot US labor market and a strengthening dollar are overpowering both geopolitical turmoil and record institutional buying.

The catalyst was Friday’s US employment report, which showed the economy added 172,000 new jobs in May — double the consensus estimate. That surprise surge has prompted traders to price in a Federal Reserve rate hike before year-end, a scenario that undermines gold’s appeal as a non-yielding asset. The central bank’s benchmark rate currently sits at 3.50%–3.75%, and markets see little chance of a cut in the near term.

Central Banks Rush In as Consumers Pull Back

Yet beneath the surface of the price weakness lies a fundamental story of voracious official-sector demand. China’s central bank added another 320,000 fine ounces to its reserves in May, extending its buying streak to 19 consecutive months — the longest such run in over a decade. Globally, central banks purchased a net 244 tonnes in the first quarter alone, according to the World Gold Council. A recent report from the European Central Bank underscores the shift: gold has overtaken US Treasuries as the world’s second-most-important reserve asset, accounting for 27% of global reserves by the end of 2025.

That institutional appetite, however, is being matched by a consumer retreat. Global jewelry demand slumped nearly a quarter year-on-year in the first quarter, with deep declines across the core markets: China down 32%, the Middle East 23%, and India 18%. Looking ahead, Metals Focus projects total gold demand will slip to roughly 4,180 tonnes in 2026, a 2% drop, with the jewelry segment alone forecast to contract by 11%. The high price is clearly deterring retail buyers, leaving institutional investors to shoulder the burden of supporting current levels almost single-handedly.

Geopolitical Heat Fails to Ignite a Rally

The paradox deepens when set against a deteriorating geopolitical landscape. Over the weekend, rockets struck Israel, threatening the fragile ceasefire with Iran. Iranian negotiators have broken off indirect talks with the US, citing repeated violations of the truce, while Hezbollah has rejected a US mediation offer. The tensions sent oil prices surging more than 2% as the Strait of Hormuz came back into focus.

Conventional wisdom would suggest such developments should lift gold, but instead the dollar has been the beneficiary. Since the yellow metal’s peak near $5,400, it has lost roughly a quarter of its value at one point, and on a monthly basis it now shows a decline of about 8%. The immediate safe-haven flows are going into the greenback rather than bullion, as investors seek liquidity in the face of uncertainty.

All Eyes on CPI

This week, attention shifts to the May US consumer price index, due Wednesday. The inflation reading will set the tone for the Fed’s mid-June policy meeting. Should the data come in hotter than expected, it would reinforce hawkish expectations and likely renew pressure on gold. Analysts point to the $4,300 support level as a key line in the sand — a break below that would leave the door open for further technical selling, regardless of central bank buying from Beijing and elsewhere.