The precious metal ended the week at $4,187.30 an ounce, notching its first weekly gain since May and rising 1.23 percent on Friday alone. But beneath the surface, a tug-of-war between two decidedly different investor camps is shaping the market’s trajectory.
On one side, institutional investors in the West have been pulling money out of bullion-backed exchange-traded funds at a steady clip. The world’s largest gold ETF, the SPDR Gold Shares, managed roughly 1,013 tonnes in mid-June but has shed more than 57 tonnes since the start of the year, leaving many positions deep underwater. Suki Cooper at Standard Chartered notes that 298 tonnes of gold held in ETFs are now sitting at a loss, particularly those accumulated around the $4,000 level – a zone that marked last October’s 52-week low of $3,901.30.
On the other side, emerging-market central banks are hoarding the metal with remarkable persistence. According to the World Gold Council, net purchases by central banks reached 41 tonnes in May, the second-highest monthly total so far this year. Poland led the charge with 18 tonnes, followed by China (10 tonnes, pushing its stockpile to 2,331 tonnes and extending its buying streak to 20 consecutive months), Uzbekistan (9 tonnes) and Kazakhstan (7 tonnes). Russia and Turkey were net sellers, offloading 6 tonnes and 3 tonnes respectively. A survey of reserve managers reveals that 89 percent of respondents expect global gold reserves to increase over the next twelve months, with 45 percent of the 76 central banks polled planning direct purchases of their own.
What sparked Friday’s uptick, however, was a dramatic miss in U.S. labour data. The June nonfarm payrolls report showed only 57,000 new jobs were created, far below the 110,000 to 115,000 economists had forecast. The unemployment rate ticked up to 4.2 percent. The immediate reaction in the futures market was a sharp repricing of Federal Reserve rate expectations: the probability of a September rate hike tumbled from 66 percent to 54 percent. Gold, which offers no yield, thrives in a looser monetary environment, and the news sent bullion higher.
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The dollar’s concurrent weakness added further fuel. The dollar index posted its largest weekly loss since April, making dollar-denominated gold cheaper for overseas buyers. Federal Reserve Chair Kevin Warsh has also signalled caution, noting softening inflation expectations. Falling oil prices – partly driven by progress in U.S.-Iran talks that eased tensions in the Strait of Hormuz – have taken additional pressure off the central bank, reducing the urgency for further tightening.
JPMorgan struck an optimistic medium-term note despite short-term headwinds. The bank now expects gold to average $4,300 an ounce in the third quarter of 2026 and $4,500 in the fourth quarter. It warns that persistently weak physical demand in India could trigger pullbacks, but sees the second half of 2026 as a recovery period underpinned by central bank buying and a structural shift away from the U.S. dollar.
Technically, gold has recovered 2.04 percent over the week, but the monthly picture remains ugly: a 6.16 percent loss. It still sits 25.58 percent below the January 2026 record high of $5,626.80. The relative strength index stands at 46.6, neutral territory. Immediate resistance lies at $4,200, with further hurdles up to $4,250. On the downside, $4,100 and $4,050 are the first support levels.
The market’s next catalysts are the Federal Open Market Committee minutes, due Wednesday, followed by the U.S. consumer price index release on July 14. Both events are likely to clarify the path for interest rates and, by extension, gold’s near-term direction.
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