Gold headed for its first weekly gain since May as traders dialed down their expectations of Federal Reserve rate hikes. Bullion rose toward US$4,200 an ounce and was up 2.2 per cent for the week. Soft United States job numbers and lower energy prices have led investors to scale back bets on monetary policy tightening, which tends to be a headwind for non-yielding gold.
Weak US Jobs Data Fuels Gold Rally
U.S. hiring slowed sharply in June, data released Thursday showed, suggesting the labour market still faces challenges despite signs of strength in recent months. Swap traders are now pricing the likelihood of a quarter-point hike in the Federal Reserve’s next meeting at less than 20 per cent, down from a third earlier in the week.
Oil prices, a key driver of inflation at the beginning of the U.S.-Iran conflict, have seen their biggest quarterly slump since 2020 as tanker flows through the Strait of Hormuz recover. Saudi Arabia and the United Arab Emirates are already shipping crude out of the Persian Gulf at rates close to pre-war levels.
Analyst Views on Gold's Outlook
“Lower energy prices and softer job growth suggest inflationary pressures are likely to ease in the months ahead,” Bart Melek, global head of commodity strategy at TD Securities, said in a note. The reduction in Fed hike expectations likely prompted traders to cover short-gold positions established earlier, along with reducing incentive to liquidate long positions, which likely explains gold’s rally over the past few days, he said.
“We believe gold is likely to rally only toward resistance at US$4,280 an ounce,” Melek said, adding that TD doesn’t expect it to reach its target of US$5,300 until next year due to lingering inflationary pressures.
Political Pressure on the Fed
Meanwhile, President Donald Trump and his allies renewed a push to reshape the Fed after the Supreme Court this week blocked an effort to fire Governor Lisa Cook. Top officials and outside allies are actively exploring ways to remove members of the Fed’s Board of Governors in Washington to clear the way for more of the president’s own picks, according to people familiar with the matter.
Repeated challenges to the Fed’s independence by the Trump administration helped supercharge bullion’s rally through the latter months of 2025, as part of the so-called debasement trade — a bet on inflation and swelling debt burdens in developed economies.
Market Performance
Spot gold advanced 1.3 per cent to US$4,176.94 an ounce as of 2:31 p.m. in New York. Silver rose two per cent to US$62.42 an ounce, after gaining five per cent in the previous three sessions. Platinum and palladium also rallied. The Bloomberg Dollar Spot Index, a gauge of the U.S. currency, was flat after ending the previous session down 0.5 per cent. Most U.S. markets are closed for a public holiday.
