Gold Jumps on Weak US Jobs Data as Dollar Slumps, But Central Bank Buying and ETF Outflows Tell a Tale of Two Markets

Gold snaps five-week losing streak as weak US jobs data fuels rate cut bets. Central bank buying offsets ETF outflows, providing a floor. Key resistance at $4,200 ahead.

The gold market snapped a five-week losing streak on Friday, rallying to $4,187.30 an ounce after a starkly disappointing US jobs report raised fresh doubts about the Federal Reserve’s tightening path. Nonfarm payrolls expanded by just 57,000 in June, roughly half the 110,000–115,000 analysts had forecast, while the unemployment rate ticked up to 4.2%. The data prompted a sharp repricing of rate expectations: the implied probability of a September rate hike, tracked by the FedWatch tool, slid from 66% to around 54%.

For gold, which pays no income, the prospect of lower-for-longer interest rates is a direct tailwind. The dollar index suffered its steepest weekly decline since April, making the yellow metal cheaper for overseas buyers. Ten-year Treasury yields eased to between 4.45% and 4.48%. Over the week gold climbed roughly 2%, recovering some of the ground lost during a brutal quarter that still leaves it 6% lower on a one-month view.

Behind the scenes, two very different forces are shaping the market. Western institutional investors have been pulling money from physically backed gold ETFs. The SPDR Gold Trust, the world’s largest, held about 1,013 tonnes in mid-June but has shed more than 57 tonnes since the start of the year. According to Suki Cooper at Standard Chartered, some 298 tonnes of gold in ETF positions are now underwater, particularly those accumulated near the $4,000 level. That pressure has been partly offset by a rally from the October 52-week trough of $3,901.30.

In stark contrast, central banks continue to hoard the metal. Net purchases reached 41 tonnes in May, the second?largest monthly total of the year, according to official data. Poland added 18 tonnes, China increased its reserves by 10 tonnes for the 20th consecutive month, pushing total holdings to 2,331 tonnes. Uzbekistan, Kazakhstan and Singapore also expanded their stockpiles. Only Russia and Turkey trimmed their holdings, by 6 and 3 tonnes respectively. This institutional buying provides a structural floor beneath prices.

The World Gold Council’s latest survey of reserve managers reinforces the trend. Of the 76 central banks polled, 89% expect global gold reserves to rise over the next twelve months, and 45% plan to make additional purchases themselves. Such strong official?sector appetite helps absorb the ETF outflows and underscores gold’s enduring status as a reserve asset.

On the chart, the recent bounce has neutralised a bearish “death cross” that formed in late June, though the metal remains well below its January 52?week high of $5,626.80. The 50?day moving average sits at $4,415, about 5% above current levels. With the relative strength index at 46.6, the market is neither overbought nor oversold, leaving room for further upside. Analysts flag $4,200 as the next resistance level; a sustained break above that could open the door to $4,225–$4,250.

Fed Chair Kevin Warsh, meanwhile, has noted softening inflation expectations as oil prices retreat amid progress in US?Iran talks, which reduces the urgency for further monetary tightening. Lower energy costs take pressure off the central bank and support the case for a pause.

The coming week will test the rally’s durability. Tuesday brings the ISM Services PMI, followed on Thursday by the minutes of the latest FOMC meeting. Investors will scrutinise the record for signs of how the Fed is weighing a cooling labour market against still?elevated inflation. Any dovish nuance could give gold another leg up, while a hawkish surprise might revive the selling pressure that defined the first half of the year.