Gold extended its rally on Friday, climbing above $4,280 an ounce as softer interest-rate expectations and renewed demand for safe-haven assets pushed bullion toward its strongest weekly performance since January.
Spot gold rose about 1.1% to $4,285.89 per ounce in early trading after reaching a seven-week high in the previous session. U.S. gold futures advanced by a similar margin to $4,344.90 per ounce.
The latest advance puts bullion on course for its strongest weekly performance since January with spot prices gaining approximately 6% this week.
The rally marks a significant turnaround from the beginning of the week, when gold traded close to $4,030 an ounce as concerns about inflation and the direction of U.S. monetary policy limited demand.
A major factor behind the recovery has been the retreat in crude oil prices from the elevated levels recorded in July.
Brent crude, which climbed as high as $102 per barrel about two weeks ago, has surrendered a substantial part of those gains. Although renewed Middle East tensions pushed Brent back toward $83 on Friday, the benchmark remains down about 7% for the week.
Lower energy prices have helped moderate concerns that another oil-driven inflation shock would force central banks to maintain restrictive monetary policy for longer.
That environment has benefited gold because the precious metal does not generate interest. Expectations of lower or more stable borrowing costs reduce the opportunity cost associated with holding bullion.
Investors are now turning their attention to the latest U.S. employment report for further direction on monetary policy.
Economists expect the world’s largest economy to have added around 80,000 jobs in July, following an increase of 57,000 in June. The unemployment rate is projected to remain at 4.2%.
The numbers could prove decisive for expectations surrounding the Federal Reserve’s September meeting.
Markets are currently divided over whether policymakers will raise interest rates next month. Traders were assigning approximately a 55% probability to a September increase ahead of Friday’s employment report.
A substantially stronger-than-expected labour market could reinforce expectations that borrowing costs will remain elevated and potentially put pressure on bullion.
Conversely, weaker employment growth could reduce expectations of additional monetary tightening, potentially providing further support for gold.
Treasury yields have consequently become another important indicator for bullion investors. The benchmark U.S. 10-year Treasury yield was around 4.67% on Friday as markets waited for the employment figures.
Currency movements are also influencing the precious metals market.
Gold has generally moved in the opposite direction to the dollar during the recent rally, reaching its highest level in about six weeks as the U.S. currency traded around six-week lows during the period. A weaker dollar typically makes bullion less expensive for investors using other currencies.
Geopolitical uncertainty is providing another layer of support.
Questions remain over efforts to resolve the conflict involving Iran and restore normal traffic through the Strait of Hormuz. Fresh tensions involving Iran-aligned groups have also reminded investors that risks to global energy supplies have not disappeared despite recent diplomatic efforts.
The rally has spread beyond gold.
Silver climbed 3.3% to $63.48 per ounce, while platinum advanced 1.5% to $1,755.90 and palladium gained 0.3% to $1,374.30. All three precious metals were heading toward weekly gains.
Gold’s performance this week suggests investors are again willing to build exposure after prices consolidated around the $4,000 region.
The immediate test will come from U.S. employment data and subsequent inflation figures, which could reshape expectations for interest rates and Treasury yields.
For now, bullion enters the final trading session of the week above $4,280 an ounce and roughly 6% higher for the week, leaving gold positioned for its strongest weekly advance in nearly seven months.
