Gold's Weekly Climb Masks a Buyer Split as Central Banks and ETF Investors Head Opposite Ways

Gold posts strongest weekly gain in months as weak US jobs data boosts Fed cut bets, while central bank buying offsets record ETF outflows.

The yellow metal closed Friday at $4,401.40 per troy ounce, capping a 7.39% weekly advance that ranks as its strongest performance in months. The 2.37% daily gain on the final trading day of the week confirmed a recovery that has been building since disappointing US jobs data landed mid-week.

That headline strength, however, obscures a market pulling in two directions at once. While official-sector buyers have been accumulating bullion at a pace not seen in years, Western investors have been quietly exiting gold-backed exchange-traded funds in size.

A Jobs Miss Reshapes the Fed Calculus

The catalyst for the latest leg higher came from the US labor market. Non-farm payrolls fell by 23,000 positions in July, a stark reversal from the 80,000 gain economists had penciled in. Earlier-released ADP figures had already set a downbeat tone, leaving traders to recalibrate their expectations for Federal Reserve policy.

With rate-hike bets fading, the zero-yield metal becomes a more compelling hold. The market's attention now shifts to Wednesday, August 12, when the US releases July consumer price data — widely viewed as the week's most consequential print for the central bank's trajectory. A softer-than-expected inflation reading would ease pressure on real rates further, trimming the opportunity cost of holding bullion and potentially reinforcing the case for a September pause or even a cut.

The Official Sector Steps In as Funds Step Out

The demand picture could hardly be more bifurcated. Physically backed gold ETFs, including the SPDR Gold Shares (GLD), have suffered sustained outflows — roughly $14.4 billion since March 1, 2026, according to SEC filings that show 32.9 million GLD shares redeemed during the second quarter.

Central banks are running the opposite playbook. Net purchases reached 288.9 tonnes in Q2 2026, a 62% jump from the same period a year earlier, with Poland and China among the most active buyers. China extended its buying streak to a 21st consecutive month in July, lifting reserves to 76.08 million ounces, while South Korea re-entered the physical market through funds for the first time in 13 years during the second quarter. A survey cited by Herald Business found 89% of institutions expect to keep expanding their holdings.

That official-sector appetite is gradually redrawing the map of global reserves. Gold's share of worldwide currency reserves surpassed that of US Treasuries for the first time in three decades during 2025 — 27% versus 22%, per European Central Bank data. The shift reflects eroding confidence in US government debt, with 72% of surveyed investors anticipating a decline in the safety of those securities.

Hormuz Diplomacy Keeps the Risk Premium Alive

Geopolitical tensions continue to underpin the safe-haven bid. An agreement between Iran and Oman bars American and Israeli vessels from transiting the Strait of Hormuz, one of the world's most critical oil arteries. Traffic through the strait has fallen to roughly 33 ships per week against a normal flow of about 130, and while reports suggest the two countries are discussing a possible shipping corridor, the threat of supply disruption keeps a firm floor under prices. The Russia-Ukraine conflict's impact on grain exports and Houthi attacks on Red Sea shipping add further layers of uncertainty, with any escalation or de-escalation feeding directly into inflation expectations through the oil price.

Technical Levels in Focus

Friday's close above the psychologically significant $4,400 mark has shifted attention to the next resistance zone around $4,535, where the 200-day moving average sits. Support lies near $4,200. With the metal having reclaimed its short-term moving averages yet remaining well below January's record high, chart watchers will also be monitoring the Jackson Hole symposium late in August for fresh signals on the longer-term rate path.

For now, the combination of a softening US economy, relentless central bank buying and unresolved geopolitical flashpoints forms the backdrop — even as the divergence between state and private investors raises questions about how durable this rally truly is.