Gold extended a sharp rebound Friday after the June nonfarm payrolls report came in roughly half the consensus forecast, rapidly unwinding the rate-hike expectations that had weighed on the precious metal for much of the week. Gold futures settled at $4,183.45 per troy ounce, up 1.47% from Thursday's close and the highest level in nearly two weeks, as the U.S. dollar index fell to a two-week low on receding monetary tightening bets.
The move capped a volatile week for gold. Earlier in the session Tuesday, gold had dropped briefly below the psychologically significant $4,000 per ounce level, its first time below that threshold since November 2025, as a stronger dollar, elevated expectations for Federal Reserve rate hikes under new Chair Kevin Warsh, and fading geopolitical risk premiums combined to pressure the metal. That low came after gold's all-time high of $5,589.38 per ounce set in late January, marking a correction of roughly 28% from peak to trough.
The reversal was driven by two sequential dovish catalysts. First, Warsh signaled at the European Central Bank's Sintra forum that inflation expectations had moderated and that the Fed was not committed to a preset policy path, softening the market's interpretation of the committee's June dot plot, which had projected a majority of officials favoring at least one rate hike before year-end. Second, Thursday's June jobs print of 57,000 — versus a Dow Jones consensus of 115,000 — caused CME FedWatch probabilities of a September hike to decline sharply, from 62.8% before the report to 50.7% by close, with further compression in Friday's holiday futures trading.
Lower oil prices provided a secondary tailwind. Crude prices fell toward $68 per barrel on Friday, approaching their lowest level since before the Iran war began in late February, as progress in U.S.-Iran negotiations continued to ease supply risk premiums. Lower energy costs reduce one of the primary near-term upward pressures on consumer inflation, which feeds indirectly into gold by reducing the urgency for the Fed to tighten. The dollar's two-week low further amplified gold's appeal for non-dollar investors, given the inverse relationship between the greenback and commodity prices denominated in U.S. dollars.
Institutional and analyst forecasts for gold remain constructive, though the path to prior highs is not considered linear. J.P. Morgan Global Research has maintained a forecast for gold to average $6,000 per ounce in the fourth quarter of 2026, representing roughly 44% upside from Friday's close, contingent on the geopolitical environment remaining elevated and central banks continuing to add to reserves. Goldman Sachs, which cut its 2026 year-end target from $5,400 to $4,900 earlier in the month, has flagged $4,400 as a downside scenario if the Fed ultimately hikes rates. Both banks agree that Friday's jobs report reduces the probability of the more aggressive tightening scenario that would represent the clearest headwind for gold.
Gold exchange-traded funds including the SPDR Gold Trust and the iShares Gold Trust are positioned to open higher when U.S. markets reopen Monday, tracking Friday's futures move. Physical demand from central banks — particularly China's People's Bank, which has accelerated reported gold purchases from roughly one ton per month to five-to-eight tons per month since March — remains a key structural support under the market regardless of near-term Fed policy direction.