Quick overview
- Gold opened the week at $4,322, boosted by a weak U.S. jobs report that reduced expectations for a September rate hike to 44%.
- The upcoming CPI and PPI data releases are crucial, as lower inflation could support gold prices by maintaining a dovish Fed stance.
- Central bank demand remains a strong structural support for gold, with significant net purchases reported in Q2 2026.
- Technically, gold is targeting a breakout at $4,375, with bullish sentiment as long as prices stay above $4,203.
Gold opens this week at 4,320-4,340 as an underwhelming U.S. jobs report from Friday pushed Gold to a seven-week high and accelerated bets against a September increase to less than 1%. According to Reuters, spot gold opened Monday at $4,322, and U.S. equity market traders reduced the chances of a September hike to 44%, down from 67%.
A weaker U.S. labor market is positive for gold. With a decrease in the dollar and Treasury yields, gold has broken its stagnant downtrend. The U.S. data for CPI and PPI are due this week and have the potential either to confirm the shift to dovish and less Fed tightening, or the opposite.
Shock NFP Changes the Fed Debate
Friday’s U.S. labor data shifted the most gold market expectations. The unexpected decrease in payrolls and subsequent downward revision of earlier months further casts doubts on the strength of the U.S. labor market. According to Reuters, weak labor data resulted in a downtick in anticipated September rate increases and improved gold’s value.
Gold doesn’t pay a yield. Further rate decreases and falling Treasury yields reduce opportunity cost and increase gold’s attractiveness. Changing September rate expectations have been significant. According to reports, futures now see a 44% chance of a September rate hike, down from a 67% chance prior to the recent weak labor data.
The dollar has also declined. On Monday, the Dollar Index, which was below 99.6, was at its lowest since early June. This, along with other reason, led to an increase in dollar-denominated gold.
CPI and PPI Become This Week’s Big Test
The labor market concerns have transitioned to inflation. The market is focused on July CPI, followed later in the week by PPI and other data releases. According to Reuters, core CPI is reported to have a 0.2% increase month-on-month and a 2.5% year-on-year gain.
A weaker inflation report would give the market confidence that the Fed can keep the rate on hold and may even start easing, resulting in a positive outlook on gold due to falling real yields. A stronger than expected inflation report would result in a negative gold outlook.
Sticky inflation with a weaker labor market would result in a stronger gold outlook and a higher US Treasury yield. For these reasons, gold was -0.29% early Monday, and, as reported by Reuters, given the positive labor market report, this was viewed as taking profit after hitting a seven-week high, and not a reversal of sentiment.
Central Banks Keep Providing Structural Support
Although short-term data are impacting gold prices, demand from central banks is gold’s strongest structural support. The World Gold Council reported that central banks net bought 289 metric tonnes of gold in Q2 2026, a fivefold increase from the revised prior quarter and 62% higher than the previous year.
Since central banks are less sensitive to price changes compared to ETFs gold prices and speculative demand, this gold buying is very important. Reserve diversification, reducing geopolitical risks and reducing reliance on traditional Reserve currencies are ensuring gold will remain in demand. That consistent buying helped create a stronger structural floor for gold, even when Western ETF buying was at a standstill.
Middle East Risk Still Matters
Geopolitics are more a part of the record than before, but are not the primary motivators. According to Reuters, the uncertainty of Iran and shipping in the Strait of Hormuz caused oil prices to rise yet again Monday while markets speculated if the advances in diplomacy would open the route in a sustainable way.
The situation is two-faced for gold. The demand for safe-haven gold can be increased by the unrest, but so can oil inflation and yield on Treasuries. For gold, the ideal situation is actually lower energy inflation and weaker U.S. labor data, and not geopolitical unrest.
Gold Technical Analysis: $4,375 Is the Next Breakout Test
For gold, a meaningful breakout occurred after crossing the descending multi-month trendline. Gold is currently trading at $4,330 and is trading above the 100-day EMA $4,317 and 50-day EMA $4,200. The breakout follows a long accumulation phase between $3,960 and $4,106. The momentum is favorable, and the RSI is near 65 and is interpreted as a strong buying zone but has not reached the extreme of an overbought condition.
The next target is $4,374.96. If price continues to close above this on a daily basis, the target breakout will be $4,476.83 and the following target will be $4,589.26. In the event of a bearish reversal, the first line of support is the 100-day EMA $4,317 and $4,203. If gold falls below $4,203, the breakout will be classified as a failed bullish breakout.
- Resistance: $4,375, $4,477, $4,589
- Support: $4,317, $4,203, $4,106, $3,960
The sentiment appears to be bullish and would remain so over $4,203. A confirmed breakthrough the $4,375 area would likely open the path toward $4,477.
Frequently Asked Questions
Why is gold holding above $4300?
Gold is appealing when combined with weak U.S. payroll data causing a diminishing prospect of Fed rate hikes, which in turn decreases Treasury yields and the U.S. Dollar.
What could move gold this week?
Gold is likely to respond the most to the U.S. CPI and PPI inflation reports. Lower inflation is likely to result in a more dovish Fed, but inflation above the expected level is likely to trigger an increase in rates.
What are the next major gold limits?
Resistance is at $4375. Once that limit is passed, increase in gold is expected to be to $4477 and afterwards to $4589.
Arslan Ali Butt
Lead Markets Analyst – Multi-Asset (FX, Commodities, Crypto)
Arslan Ali Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.
His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.
His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.
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