Gold has staged a rebound this week, potentially ending a five-week consecutive decline, though analysts caution that the durability of this recovery hinges on several key factors.
In early trading on Friday, spot gold prices rose 1.4% to approximately $4,182.28 per ounce. For the week, the metal is up about 2.3%, on track for its first weekly gain since late May.
The immediate catalyst for this rebound was a significantly weaker-than-expected US non-farm payrolls report for June. The slowdown in job growth prompted markets to substantially dial back bets on a Federal Reserve interest rate hike in September, with the probability dropping to around 53.5% from roughly 65% prior.
Strategists at OCBC expressed a "cautiously optimistic" view on gold in a report on Friday, noting the jobs data helped reduce hawkish tail risks and upgrading their near-term rating from "cautious" to "cautiously optimistic."
They simultaneously emphasized that a sustained recovery for gold still requires the simultaneous fulfillment of three conditions: a more pronounced decline in real yields, stabilization in ETF and investor demand, and a softening of the Federal Reserve's current hawkish stance.
Weaker-Than-Expected Jobs Data Triggers Rally
The direct catalyst for the gold rally came from US labor market data. The non-farm payrolls report released on Thursday showed the US economy added 57,000 jobs in June, far below the downwardly revised 129,000 in May and significantly missing the Dow Jones consensus forecast of 115,000.
Following the data release, market pricing for a Fed rate hike in September notably softened. According to the CME FedWatch Tool, the market-implied probability of the Fed raising rates by at least 25 basis points in September has fallen to 53.5%, down from about 65% before the report. The Fed is widely expected to hold rates steady in July.
The weaker employment data has reignited market speculation about the future path of interest rates, propelling gold and the broader precious metals sector higher.
Gold Posts Worst Quarterly Performance in 13 Years Through June
Despite this week's rebound, gold's overall performance this year remains under pressure. The current price still trades at a discount of about 22% from the all-time high above $5,300 reached in January. Furthermore, the quarterly decline for the three months ended June marked gold's worst performance in 13 years. Silver has also fallen approximately 12% year-to-date.
The pressure on gold stems from a confluence of headwinds: persistent high inflation, a strong US dollar, and a reassessment of gold's safe-haven appeal following the outbreak of the US-Iran war in February, all of which have dampened investor appetite. Spot gold is down about 3% year-to-date.
This stands in stark contrast to its performance in 2025. That year, gold and silver surged 66% and 135% respectively, setting historical records. However, the market turned volatile early in 2026, with silver futures posting their largest single-day decline since the 1980s in late January.
Sustained Recovery Still Requires Three Conditions
While OCBC strategists upgraded their near-term rating, their language remains cautious. They noted that although softer-than-expected jobs data helps compress hawkish expectations, the unemployment rate remains stable, Fed officials' comments are still leaning hawkish, and inflation risks have not dissipated, justifying a tactically cautious stance.
The bank's strategists clearly stated that for gold to achieve a "more sustainable recovery," three conditions must be met simultaneously: first, a more decisive decline in real yields; second, stabilization in ETF and investor demand; and third, a softening of the Fed's current hawkish stance. They added that, from a technical perspective, risks for gold remain skewed to the upside.
"If subsequent US data continues to weigh on real yields and the US dollar, gold's recovery could be sustained," the strategists said. The current repricing of the Fed's path may have only opened a window, but whether it develops into a sustained trend still depends on validation from multiple factors.
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