Gold rebounded from a seven-month low this week, breaking back above the closely watched $4,100 level on Thursday after a disappointing June employment report reshaped trader expectations for the Federal Reserve's next move, while a fresh pullback in oil prices took some of the edge off inflation concerns.
Spot prices climbed more than 2% on the day to change hands above $4,130 an ounce, extending a recovery that began earlier in the week as bullion clawed back from its weakest levels since late 2025. The move was triggered by a Labor Department report showing U.S. nonfarm payrolls rose by just 57,000 in June, far short of the roughly 110,000 economists had forecast and the slowest pace of hiring in four months. The unemployment rate unexpectedly fell to 4.2% from 4.3% as workers exited the labor force, while annual wage growth held at 3.5%. Traders responded by paring bets on a Fed rate increase, with the probability of a September hike priced into the CME FedWatch tool sliding to roughly 51%, down from about 66% ahead of the release. The repricing followed remarks a day earlier from Fed Chair Kevin Warsh, who told a European Central Bank forum that inflation expectations and risks had eased, even as he reiterated the central bank's commitment to returning price growth to its 2% target. Gold found further support as oil extended a third straight session of declines, helped by increased tanker traffic through the Strait of Hormuz and reports of progress in indirect talks between the U.S. and Iran, developments that further eased fears of energy-driven inflation.
On the charts, the push through $4,100 marks a meaningful technical shift after bullion touched its lowest level in seven months earlier in the week. Analysts say a successful retest of the $4,100-to-$4,120 zone as support would open the door to a run toward $4,174, a level that roughly tracks gold's 21-day moving average and has capped recent recovery attempts. A decisive close above that band would mark the first real break in gold's short-term downtrend since prices peaked earlier this year.
The near-term bounce has done little to change the longer-term view at Goldman Sachs, which continues to forecast gold reaching $4,900 an ounce by the end of 2026. The bank points to structural diversification by emerging-market central banks as the anchor of that call, citing a recent World Gold Council survey in which a record share of reserve managers said they plan to add to gold holdings over the next 12 months. That sovereign demand, Goldman argues, should keep a floor under prices even as cyclical factors swing.
However, outlier UBS painted a clear picture of how gold could rally by 27% over the next year. In a June 25 note, UBS said a mix of three factors should drive a recovery in prices to about $5,200 an ounce.
The bank said that investors are overestimating the hawkishness of the Federal Reserve after Kevin Warsh's first meeting as the central bank's chairman. The Fed's next move is more likely to be a cut than a hike, the bank said, and when those expectations shift, it should be a boon for gold.
The Fed tends to cut interest rates when the economy needs a boost, which is also when investors might seek out safe haven assets like gold. UBS said they expect economic growth in slow over the next year.
Secondly, the US dollar should weaken as long positioning in the currency is "stretched," and as fiscal deficits continue to rise.
"A weaker dollar has historically been a powerful tailwind for gold," Ulrike Hoffmann-Burchardi, the bank's global head of equities, said in the note.
And lastly, global central banks should continue buying up the yellow metal. In May, for example, Poland and China bought 18 and 10 metric tons of gold, respectively. The bank said annual demand should remain steady, providing a floor for prices.
Still, strategists caution the path back toward that target is unlikely to be smooth. The dollar remains close to its strongest level in more than a year, a headwind that raises the cost of holding bullion for buyers outside the U.S., while gold-backed ETFs have continued to shed assets, with redemptions accelerating over the past two weeks as rate-sensitive investors trim exposure. Standard Chartered estimates nearly 300 tons of ETF-held gold is now sitting at a loss, an overhang that could spur fresh selling each time prices approach prior entry points. Taken together, those crosscurrents point to a choppier stretch for bullion before the medium-term gains tied to central bank buying and structural demand are expected to materialize.
With U.S. markets closed Friday for the Independence Day holiday, traders head into the long weekend digesting today's data before turning to the Fed's July 29 policy decision for the next major signal on the central bank's rate path.
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