Gold’s Historic Reserve Shift Collides with Labor Market Jitters

Gold rebounds 0.7% to $4,472 after JOLTS spike; now 27% of global reserves, overtaking Treasuries. Central banks buy 243.7 tonnes in Q1. Focus on Friday's NFP.

Gold has clawed back some ground on Thursday after a bruising JOLTS report sent the precious metal tumbling, even as new data reveals a tectonic shift in global reserve allocations. The yellow metal now makes up 27 percent of worldwide official currency reserves, overtaking US Treasuries for the first time — a milestone that, according to the European Central Bank’s latest report, owes much to the surging price of recent years rather than pure accumulation.

Spot bullion was changing hands at $4,472.60 an ounce by midday, up 0.7 percent from Wednesday’s close. That rebound followed a sharp selloff triggered by the US Job Openings and Labor Turnover Survey, which showed 7.618 million vacant positions in April — far above the 6.866 million consensus. The surprise spike fanned fears of persistent wage pressures and sticky inflation, quenching hopes for near-term rate cuts. The dollar strengthened on the news, and gold hit an intraday low of $4,434.50.

The buying patterns of central banks have provided a stabilizing undercurrent. The People’s Bank of China added another 8 tonnes in April, extending its unbroken purchase streak to 18 months. Poland was the standout buyer, snapping up 14 tonnes, which nudged its gold holdings to nearly one third of total national reserves. Russia, meanwhile, trimmed its position modestly on the selling side. For the first quarter as a whole, the World Gold Council tallied net central bank purchases of 243.7 tonnes — 3 percent above the year-ago level.

The EZB’s June report also carries an important caveat. Recalculating reserve shares using end-2023 prices restores US Treasuries to the top spot at 26 percent, underscoring that a large chunk of gold’s newfound dominance is a mirror of its own price appreciation. And that rally has cooled significantly: at roughly $4,466 an ounce, bullion now trades 20 percent below its January record and has slipped under its 50-day moving average, signaling fading short-term momentum.

Private investors are telling a different story. In Germany, the Gold Investor Index climbed 2.4 points to 58.3 in May — any reading above 50 signals more buyers than sellers — and holdings in specialized custody vaults rose to 43.6 tonnes, the highest in six months. But the real action is in Asia. Global demand for bars and coins hit 474 tonnes in the first quarter, a 42 percent surge year-on-year, as Chinese investors scooped up 207 tonnes of physical investment gold — the largest quarterly haul since 2013. Indian demand in the same segment jumped by more than a third to 62 tonnes. Asian gold ETFs also saw heavy inflows, while North American funds bled capital.

All eyes now turn to Friday’s US non-farm payrolls report. A weaker print would revive expectations for a late-2026 rate cut and likely propel gold higher. A strong number, however, could snuff out the fledgling recovery. For now, the metal is oscillating in a tight band between $4,427.74 and $4,483.17, caught between a structural reserve shift and the immediate gravity of the American labour market.