Gold prices are currently holding firm around $4,400 per ounce, caught in a struggle between significant macroeconomic forces. Strong US labor market data has led to a repricing of global interest rate futures, reducing expectations for Federal Reserve rate cuts and strengthening the US dollar. Nonfarm payrolls increased by over 185,000 jobs, the unemployment rate remained at 4.2%, and annual wage growth was 3.8%. This robust data pushed yields on 10-year US Treasury notes towards 4.30%.
However, the downward pressure on gold from rising bond yields is being counteracted by severe geopolitical risks in the Middle East. Escalating military conflicts involving Iran, along with shipping disruptions and drone attacks in the Strait of Hormuz, have driven crude oil benchmarks higher, reigniting fears of imported inflation. West Texas Intermediate (WTI) is trading near $90 per barrel. These tensions are limiting gold's losses, despite hawkish Fed expectations.
Despite the conflicting pressures, gold has demonstrated underlying strength, trading in a tight range between $4,390 and $4,430 after a multi-week rally that previously pushed it above $4,600. Institutional investors are viewing price retreats near $4,400 as strategic buying opportunities, evidenced by over $6.4 billion in net inflows into globally listed gold exchange-traded funds, the strongest accumulation since early 2024. Retail demand for physical gold in Asia and the Middle East has also reached seasonal records, as consumers seek wealth preservation against local real estate and currency volatility.
