Gold posted its strongest weekly performance since January, rising approximately 7% last week as investors responded to a weaker U.S. dollar, falling Treasury yields, and softer employment data that reduced expectations of aggressive Federal Reserve rate hikes.
Although the employment report pointed to a cooling labor market, the underlying data was more balanced, with layoffs remaining low and private employment increasing by 30,000. The headline weakness was partly influenced by seasonal factors, including a decline of around 50,000 government education jobs.
Key factors driving gold prices higher
- Weak U.S. jobs data: Softer-than-expected nonfarm payroll figures and downward revisions raised concerns about economic momentum, encouraging investors to seek defensive assets.
- Lower yields and weaker dollar: Falling Treasury yields and a softer U.S. dollar reduced the opportunity cost of holding non-yielding assets such as gold.
- Fed policy uncertainty: Growing uncertainty around future monetary policy decisions has increased demand for gold as a safe-haven investment.
- Precious metals strength: The rally extended beyond gold, with silver, platinum, and palladium also gaining momentum, while copper remained close to recent highs.
- China expands gold reserves: The People’s Bank of China is increasing gold storage capacity in Hong Kong as part of efforts to strengthen the city’s role as a global bullion trading hub. The move follows a broader trend of shifting sovereign gold reserves back toward Asia and comes alongside a 21-month buying streak, including a 20-ton increase in July 2026.
Gold approaches a key technical turning point
Despite the recent rally, gold remains below its 150-day moving average. Gold miner ETFs, including GDX and GDXJ, which typically provide greater leverage to movements in the metal, are currently testing the same technical level.
A key development for investors is that Newmont Mining, the largest holding within the gold mining sector, has already moved above its 150-day moving average. This could indicate that broader gold-related assets may follow if momentum continues.
Options market shows bullish opportunities
From an options perspective, gold currently displays a more balanced volatility profile, with out-of-the-money call options carrying higher implied volatility than at-the-money options.
This dynamic can improve the potential payoff of bullish call spread strategies compared with similar approaches in broader equity markets.
For example, a November 400/460 call spread on SPDR Gold Shares (GLD) costs approximately $16.15, or slightly more than 25% of the spread width. Each contract represents 100 shares, creating a total cost of around $1,615 and offering an upside potential of nearly 3:1 if GLD rises another 15% over the next 100 days.
