Gold's 3% Rebound Rests on Dollar and Yields, Not on a Demand Revival

Gold climbed 3.0% on Wednesday, settling at $4,046.01 per troy ounce as a weaker US dollar and falling Treasury yields did the heavy lifting. Reuters tied the move to market reaction after Democrats won both chambers of Congress, with traders also weighing what the election outcome might mean for AI buildout and US growth prospects. What the rally does not signal is a broad revival in physical demand — the latest World Gold Council figures, released a day earlier, tell a far more fragmented story.

Official buyers and funds carry the load

Central banks and other official institutions bought 321 tonnes net during the reporting quarter, a 42% jump on the same period a year earlier. Purchases from January through September totaled 675 tonnes. Gold ETFs added 211 tonnes, lifting their holdings to a record 4,256 tonnes — a second pillar of institutional support.

That institutional strength sits in sharp contrast to the private side of the market. Worldwide gold demand slipped 1% year on year to 1,369 tonnes, with jewellery off 17% and bars and coins down 19%. The gap between buyer groups undercuts any reading of the price move as evidence that jewellers or retail buyers of bullion and coins have turned aggressive again.

A downgrade with a caveat

The WGC cut its forecast for growth in gold investment demand for 2026, halving it to 200 tonnes from 400, citing fading appetite for bars and coins. At the same time, the council raised its estimate for central bank purchases — meaning the more cautious investment outlook is not a blanket downgrade of every buyer category that has been propping up the market.

Jobs report next on the calendar

Attention now shifts to Friday's US labour market report for October, which Reuters notes could offer clues on the Federal Reserve's next policy step. After a session driven by currency and rate moves, that release gives investors a fresh reference point for pricing gold — against a fundamental backdrop that remains split, with official-sector and ETF buying on one side and softer private demand on the other.