Central Banks Fuel Gold Surge as Interest Rate Hikes Come into Question

Gold prices surged over 4% to $4,245 on Wednesday after the U.S. ADP employment report showed weaker-than-expected job growth in July.

The disappointing labor data sparked speculation that the Federal Reserve may pause its interest rate hikes, boosting demand for gold as a safe-haven asset.

Central banks are also buying up gold at an unprecedented pace, with official purchases reaching 289 tonnes in the second quarter of this year, the World Gold Council reported. This is the strongest quarterly showing since late 2024.

The combination of central bank accumulation and global macro uncertainty has created a supportive backdrop for the gold price, according to analysts.