Gold extended its latest rally on Monday, holding above $4,300 an ounce as weaker US employment figures, stronger speculative demand and renewed buying by China’s central bank gave the precious metal fresh support.
Spot gold traded near $4,340 an ounce, after surging almost 7% last week. The move pushed bullion firmly above its 60-day moving average and marked a sharp break from the relatively subdued trading range that had kept prices close to $4,000 for much of the previous month.
The latest gains came after US data showed an unexpected loss of 23,000 jobs in July, adding to signs of softness in the labour market. The weaker employment picture has strengthened expectations that the Federal Reserve could face growing pressure to ease monetary policy, despite continued concerns over inflation.
Investors turn more bullish on gold
Investor positioning has also become increasingly supportive of bullion.
The latest data from the Commodity Futures Trading Commission showed that hedge funds and money managers lifted their net bullish exposure to gold last week to its highest level in more than six months.
The increase suggests that investors are becoming more confident in gold’s outlook as expectations for interest-rate policy shift and uncertainty surrounding the global economy remains elevated.
Gold generally benefits when expectations for lower interest rates increase. Unlike bonds and other yield-bearing assets, bullion does not generate interest, meaning its relative appeal can improve when borrowing costs and government bond yields decline.
Fed outlook remains critical
The Federal Reserve is facing a complicated economic backdrop, with weaker employment data emerging while inflation risks remain persistent.
The ongoing conflict in the Middle East is adding another layer of uncertainty. Prolonged geopolitical tensions can disrupt energy markets, supply chains and broader economic activity, potentially complicating the Fed’s decisions over inflation and interest rates.
For gold, the combination of softer economic data and expectations of less restrictive monetary policy could provide an important source of support.
China adds another source of demand
China is also playing an increasingly important role in the gold market.
The country’s central bank expanded its gold reserves in July by the largest amount since October 2023, reinforcing expectations that official-sector demand could continue to underpin prices.
Central bank purchases have become an important structural source of support for gold in recent years. Continued buying from China could help offset periods of weaker consumer or investment demand and provide additional momentum if prices remain elevated.
Geopolitical risks keep markets on edge
Despite the recent rally, gold’s performance remains closely tied to developments in the Middle East.
Bullion is still nearly 20% below the levels reached before the Iran war began, highlighting how sharply prices have responded to changing expectations surrounding the conflict.
With no clear resolution in sight, geopolitical uncertainty is likely to remain an important factor for gold traders alongside US inflation data, employment figures and expectations for Federal Reserve policy.
Gold faces a crucial test
Gold’s move above $4,300 represents a significant shift after weeks of consolidation around the $4,000 level.
As of 12:23 p.m. in New York, spot gold was holding around $4,363 an ounce, while silver had climbed to approximately $65.15.
The key question now is whether weaker US employment, stronger investor positioning, continued Chinese central-bank buying and geopolitical uncertainty can keep the rally going.
For gold, the next phase of the advance could depend on whether these forces develop into lasting sources of demand — or whether the metal begins to encounter renewed selling after its powerful run.
Disclaimer: The information provided in this article is for general information and educational purposes only and should not be considered financial, investment, taxation or legal advice. Gold and other precious metals can be volatile, and past performance is not an indication of future results.
