Gold climbs towards strongest week since January

Gold prices strengthened on Friday, putting the precious metal on course for its biggest weekly gain since January as easing energy costs reduced inflation concerns and investors awaited US employment data that could reshape expectations for Federal Reserve policy.
Spot gold rose 0.6% to about $4,262 an ounce during Asian trading, after touching its highest level in seven weeks. Prices have gained more than 5% this week, extending a recovery that has taken the metal decisively above the psychologically important $4,000 level. US gold futures advanced about 0.5% to $4,322 an ounce.

The rally has been supported by a sharp decline in oil prices earlier in the week after fears of an immediate escalation in the confrontation between the United States and Iran eased. Lower crude prices have reduced concerns that an energy shock could feed through to consumer prices and force the Federal Reserve to maintain tighter monetary policy for longer. Oil recovered some ground on Friday as uncertainty persisted over shipping through the Strait of Hormuz.

Gold, which does not pay interest, typically benefits when investors expect borrowing costs or bond yields to remain contained. Traders have scaled back expectations for a US interest-rate increase in September, with the implied probability falling to roughly 55% from about 63% earlier in the week.

Attention is now centred on July nonfarm payrolls, due later on Friday. Economists expect payroll employment to have increased by about 80,000 jobs, compared with a gain of 57,000 in June. The unemployment rate is forecast to remain at 4.2%, while annual wage growth is expected to hold near 3.5%.

The figures will carry particular weight because the Federal Reserve is balancing signs of slower employment growth against continuing inflation risks. A materially weaker payroll number could encourage investors to reduce expectations for additional monetary tightening, potentially weakening the dollar and Treasury yields and adding support to bullion.

A stronger-than-expected report could produce the opposite reaction. Evidence that hiring remains resilient, especially if accompanied by stronger wage growth, would reinforce arguments for keeping monetary policy restrictive. That could lift bond yields and the dollar, increasing the opportunity cost of holding non-yielding gold.

June’s labour report showed employment increasing by only 57,000, while average hourly earnings rose 0.3% during the month and 3.5% from a year earlier. Payroll figures for April and May were also revised lower by a combined 74,000 jobs, strengthening the view that the labour market has lost momentum even without experiencing a sharp contraction.

The July report is scheduled for release at 8.30am Eastern Time on Friday, equivalent to 6pm in India. Investors will also scrutinise revisions to earlier months because adjustments to previous payroll estimates have become increasingly important in assessing the underlying direction of employment.

Gold’s advance has also reflected changing perceptions of geopolitical risk. A reduction in immediate fears surrounding military escalation in the Middle East helped push energy prices lower, but uncertainty surrounding Iran, Gulf shipping and the Strait of Hormuz continues to provide an underlying safe-haven argument for bullion.

The metal has experienced unusually large swings during 2026 as investors moved between concerns over geopolitical instability, inflation, interest rates and the strength of the dollar. Gold traded above $5,300 an ounce during heightened Middle East tensions in early March before retreating sharply as stronger inflation expectations and higher yields diminished the attraction of non-interest-bearing assets.

Its latest recovery has strengthened technical support around $4,000, a level that buyers have defended after several periods of volatility. A sustained move above the latest seven-week high could encourage momentum-driven buying, although the direction of US monetary policy remains a major constraint on further gains.