Gold rose on July 3, all set for a weekly gain after four straight weeks of declines, as weak US jobs data dampened expectations for a near-term Federal Reserve rate hike.
Spot gold was up 1.3% at USD 4,176.29 per ounce after hitting its highest since June 23. Bullion is held above its 21-day moving average and is up over 2% for the week. US gold futures for August 2026 delivery gained 1.53% to USD 4,188.80/oz.
Data on July 2 showed that US nonfarm payrolls rose by 57,000 last month. As per Han Tan, chief market analyst at Bybit, the yellow metal’s rally was driven by a sharp slowdown in the hiring activities in the United States in June.
Traders now see about a 54% chance of a rate increase in September, down from 66% before the data, as per the CME FedWatch tool. As per the market practices, lower interest rates reduce the opportunity cost of holding non-yielding assets like gold.
Weak US jobs data is causing the dollar to fall. As the dollar becomes weaker, gold becomes cheaper for people using other currencies, which, as per the analysts, will likely increase demand for the precious metal. As per the World Gold Council (WGC), central banks added a net 41 metric tonnes of gold to their reserves in May 2026.
“Central banks are still expected to remain a demand pillar for spot prices over the longer term, although some have been selling their holdings recently to defend currencies,” said Tan.
Talking about the decline in the gold price, the ratio was the steepest since October 2008 in June, as expectations of higher US interest rates and a stronger dollar triggered a sharp sell-off in the precious metal, overshadowing its traditional appeal as a safe-haven asset.
The yellow metal, at its spot prices, fell more than 12% during the month, slipping below the psychologically important USD 4,000-an-ounce level and trading around USD 3,975-USD 3,990 per ounce by month-end. In the process, gold also witnessed its first quarterly loss since 2024.
In June, a stronger dollar made gold more expensive for buyers using other currencies, reducing global demand. At the same time, rising bond yields have diminished the appeal of non-yielding assets like the yellow metal, prompting investors to rotate into interest-bearing investments.
The recent sell-off and the fall in prices have also challenged gold’s reputation as a hedge during periods of geopolitical uncertainty. Although conflict involving Iran initially fueled demand for safe-haven assets, the rally proved short-lived as markets shifted their focus toward inflation risks, monetary tightening, and currency strength.
“The combination of high inflation, elevated interest rate expectations, and a stronger dollar is overwhelming the traditional factors that usually support gold,” market analysts said, noting that geopolitical tensions alone have been insufficient to sustain buying interest.
From now onwards, US economic data (including employment figures), as well as interest rate-related comments from Federal Reserve officials, will be scrutinised by the investors. Any indication that inflation remains persistent could reinforce expectations of additional rate increases, extending pressure on bullion.
Strategists believe gold’s near-term outlook will depend largely on whether real yields begin to ease, the dollar weakens, or the Federal Reserve adopts a less hawkish stance. Until then, analysts expect rallies to remain limited, with bullion likely to consolidate below recent highs after suffering one of its sharpest monthly declines in almost two decades.