Gold's Conflicting Signals: Blockbuster Payrolls Trigger Selloff, But Central Banks and Asian Buyers Circle the Wreckage

Gold suffers steepest weekly drop in months after blowout US payrolls data, but central bank and Asian demand offer a counter-narrative to the selloff.

Friday’s blowout US jobs report sent gold into its sharpest weekly decline in months, extinguishing hopes of imminent rate cuts and knocking the precious metal through key technical supports. Yet beneath the surface, a fragmented market tells a more nuanced story — one where institutional demand from central banks and opportunistic buying in Asia are quietly contesting the bearish narrative.

Payrolls Shock Resets Rate Expectations

The Bureau of Labor Statistics reported 172,000 new nonfarm payrolls for May, nearly double the 85,000 economists had forecast. The unemployment rate held steady at 4.3 percent. For gold, which offers no yield, the data was unequivocally negative: a resilient labor market gives the Federal Reserve room to keep borrowing costs elevated for longer.

The yield on the ten-year US Treasury note jumped to 4.544 percent, while the dollar strengthened, compounding pressure on the dollar-denominated metal. Gold tumbled 3.33 percent on Friday to close at $4,352.90 an ounce, bringing the weekly loss to nearly five percent. The retreat from the January record high now stands at almost 23 percent, and the year-to-date gain has shrunk to a wafer-thin 0.26 percent.

Technically, the selloff has become brutal. The Relative Strength Index slid to 34.4, flirting with oversold territory. More significantly, gold closed decisively below its 200-day moving average on Friday, a violation that chart watchers view as a bearish milestone. The May low around $4,367 now serves as the next support level — but with the price already beneath it, a return above the failed moving averages would be needed for any stabilization signal.

Analyst Sentiment Turns Sharply Negative

The mood among market professionals has soured quickly. In Kitco’s weekly survey, 11 of 15 analysts — or 74 percent — forecast further price declines. Only two expected a rebound. Retail investors were more evenly split: of 49 respondents, 23 predicted gains, 18 anticipated more losses, and eight foresaw sideways action.

Those bearish expectations are underpinned by real money flows. Physically backed gold ETFs suffered global outflows of $2 billion in May, reducing holdings to 4,121 tonnes and assets under management to $604 billion. The regional breakdown reveals stark divergence: Europe was the sole region to record inflows, adding $334 million, while North America bled $1.1 billion and Asia posted its first monthly outflow since August 2025 at minus $1.2 billion. On the futures market, the net long position on COMEX slipped 2.5 percent in May to 466 tonnes, as money managers increased their bets but other participants pared exposures.

Beneath the Selling, Physical Demand Tells a Different Story

While financial investors flee, the physical market is sending mixed signals. First-quarter global jewelry demand collapsed 25 percent year-on-year, with China recording a 31 percent plunge as buyers balked at historically elevated prices. Yet central banks — a force that reshaped the gold market in recent years — continued accumulating, adding a net 244 tonnes in the first quarter. That institutional buying provides a dependable floor in a nervous environment.

More strikingly, the sharp drop in the spot price has triggered a rush of retail buying in price-sensitive markets. In Vietnam, long queues formed outside gold shops over the weekend as locals seized the correction to add physical bullion. Such behavior mirrors patterns seen in previous selloffs: steep declines attract bargain hunters who view $4,350 as an attractive entry point.

Macro Calendar Keeps the Pressure On

The week ahead is heavy with central bank decisions. The European Central Bank is widely expected to raise its benchmark rate by 25 basis points, while the Federal Reserve — whose June 16-17 meeting now dominates the gold outlook — is seen holding its restrictive stance. That monetary policy divergence will keep currency markets volatile, with the strong dollar acting as a headwind for gold.

Longer-term, some forecasters remain defiantly bullish. Metals Focus projects an average gold price of $4,920 in 2026. The rapid correction from January’s highs has already started to attract strategic buyers, but in the near term, the payrolls shock has reset the macro narrative. Until inflation data and Fed guidance provide clarity, the yellow metal may struggle to reclaim its footing.