Gold's Double Blow: Payrolls Shock Shatters Technical Supports as Futures Open Interest Hits 16-Year Low

Gold suffers worst weekly drop in months after US jobs report crushes rate-cut bets, breaches 200-day moving average and $4,500 support as speculative interest dries up.

Gold suffered its sharpest weekly decline in months on Friday, but the headline plunge of more than three percent tells only part of the story. Behind the $4,352.90 settlement — a level that represents a breach of both the 200-day moving average and the key psychological support at $4,500 — lies a deeper erosion of speculative interest that has pushed futures market activity to its lowest ebb since 2009.

The trigger was unambiguous. The Bureau of Labor Statistics reported 172,000 new nonfarm payrolls for May, nearly double the 85,000 to 88,000 consensus that economists had penciled in. That single data point effectively wiped out lingering rate-cut expectations and, for some market participants, even revived the prospect of further tightening. The US dollar index jumped decisively above 100, while bond yields climbed — a double headwind for a non-yielding asset like gold.

The technical damage was severe and immediate. Gold sliced through the 200-day moving average, currently in the 4,380-4,400 region, and closed below it. In chart analysis, that break is treated as a warning that the broader uptrend may have run its course. The relative strength index now sits at 34.4, close to oversold territory but not yet flashing a definitive buy signal. The next support level to watch is around $4,280, with the May low of $4,367 also in play as a near-term reference point.

What makes this sell-off particularly striking is what happened beneath the surface at the futures market. Open interest in gold futures — the total number of outstanding contracts — has slumped to roughly 326,000, the lowest level since 2009. In the past week alone, the number of contracts shrank by another eight percent. Crucially, the volume spike on Friday was not accompanied by a surge in short selling; rather, existing long positions were being liquidated. Speculative capital is leaving the market, and no fresh buyers are stepping in to absorb the selling.

The bearish mood among professionals is resounding. In the weekly Kitco survey, 11 of 15 analysts — 74 percent — predicted further declines. Retail investors were more divided: of 49 respondents, 23 expected a rebound, 18 anticipated more losses, and eight foresaw a sideways drift. That split mirrors the divergence in physical demand. Exchange-traded funds backed by gold saw global outflows of $2 billion in May, reducing holdings to 4,121 tonnes and assets under management to $604 billion. Regional flows were uneven: Europe eked out an inflow of $334 million, while North America bled $1.1 billion and Asia recorded its first monthly outflow since August 2025, losing $1.2 billion. On the COMEX, net-long positions dipped 2.5 percent in May to 466 tonnes, as money managers added to their bets while other participants trimmed.

Yet the price floor may have a structural underpinning. Central banks have been relentless buyers: they accumulated 863 tonnes globally in 2025 alone, and China extended its purchasing streak to 18 consecutive months through April 2026. Whether such physical demand can offset the technical selling pressure will be tested in the coming sessions, particularly as gold tries to reclaim the broken moving averages.

The calendar for the week ahead is loaded with potential catalysts. On Wednesday, the May consumer price index will be released, and with energy costs climbing, analysts worry about stickier-than-hoped inflation — a scenario that would keep pressure on gold. The bigger event is the Federal Reserve's June 16-17 meeting, which will be the first under new chair Kevin Warsh, a known hawk. While an unchanged rate is all but priced in, the dot plot will be the key: any signal of a stricter policy trajectory for the second half of 2026 would likely compound gold's woes. Whatever the outcome, the metal enters the week with both its technical structure and its speculative foundation badly shaken.