Gold clawed back above $4,500 on Thursday, but the recovery masks a tug-of-war between easing geopolitical tensions, wildly inconsistent labour market data, and a fresh surge in energy prices. Traders now face a pivotal test with Friday’s payroll report, which could either validate the rally or send the metal sliding back toward support.
Jobs Data Points in Opposite Directions
The US labour market sent mixed messages this week. Weekly initial jobless claims rose to 225,000 — the highest since February 2026 and well above the 213,000 analysts had pencilled in. That weakness fed expectations of cooling inflation and revived bets that the Federal Reserve might pivot toward easing. Yet just 24 hours earlier, ADP’s private-sector payrolls figure of 122,000 for May had comfortably beaten the 118,000 consensus, suggesting underlying strength in hiring.
The contradictory signals leave gold in a bind. A softening jobs market lowers the opportunity cost of holding the non-yielding metal and encourages rate-cut speculation. But the ADP print reminded investors that the economy is still adding jobs at a solid clip — a factor that keeps the Fed’s tightening bias alive. Cleveland Fed President Beth Hammack hammered that point home, leaving the door open for further rate hikes if inflation reaccelerates.
Ceasefire Dents Dollar, but Oil Fans Inflation Fears
Geopolitics added another layer of complexity. News of a ceasefire between Israel and Lebanon sapped demand for the US dollar as a safe haven, pushing the Dollar Index down to 99.27. A weaker greenback makes dollar-priced bullion cheaper for overseas buyers and gave gold a lift. The easing of tensions in the northern border also raised hopes for progress in US-Iran talks, further weighing on the dollar.
At the same time, however, attacks on energy infrastructure in the Middle East sent oil prices sharply higher. West Texas Intermediate briefly touched $97 a barrel, while Brent hovered just below the $100 mark. Surging crude prices stoke fears of “sticky inflation” — the kind that central banks struggle to tame with rate cuts. For gold, that is a double-edged sword: geopolitical risk supports safe-haven demand, but high energy costs prolong restrictive monetary policy, which traditionally hurts the metal.
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Structural Buyers Provide a Floor
The price action has been supported by a broadening base of institutional and corporate buyers. Central banks added a net 17 tonnes of gold in April, reversing March’s net sales, according to the World Gold Council. Poland bought 14 tonnes, China added 8 tonnes to extend its buying streak to 18 consecutive months, bringing reserves to 2,322 tonnes, and the Czech Republic continued its own 38-month purchasing run.
Beyond central banks, new sources of demand have emerged. Indian pension funds, Chinese insurers, and even digital-asset issuers like Tether are increasingly allocating to physical gold to back reserves or hedge against volatility. These buyers tend to step in during price dips, creating a structural floor that explains why gold has not tumbled further despite the headwinds.
Technical Picture Hinges on Payrolls
Gold was trading around $4,506 to $4,529 on Thursday — up roughly 1% to 1.5% from the previous session. The 200-day moving average at $4,427 continues to act as a solid support, a comfort to chart watchers. The next upside target is the $4,600 resistance area, but the metal’s immediate fate rests on Friday’s nonfarm payrolls report.
The 50-day moving average sits at $4,641, about 2.4% above current levels, and the Relative Strength Index at 45.9 points to a neutral-to-modestly-bearish configuration. A strong payroll number that confirms the ADP reading could undo the recent gains and push gold back below $4,450. A weak print, on the other hand, would reinforce the narrative of a slowing economy and bring the $4,500 mark firmly back into reach, reviving hopes for a monetary policy shift later this year.
Metals Focus, meanwhile, maintains its longer-term bullish view, forecasting an average gold price of $4,920 in 2026 — a roughly 43% increase from current levels. For now, though, traders are focused on the here and now: one jobs report that could settle the direction of the next major move.
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