Weaker Jobs Data Lifts Gold Amid Central Bank Demand and Rate Uncertainty
Gold prices saw a modest rise following a weaker-than-expected US employment report, which eased some pressure on expectations of further Federal Reserve rate hikes. Spot bullion climbed to USD 4,160.19 an ounce, up 0.5% from the previous session's close at USD 4,140.77. The September nonfarm payrolls report revealed just 29,000 jobs added, far below forecasts, prompting traders to scale back bets on an October rate hike. However, the upside for gold was limited by a strong US dollar and elevated Treasury yields, which continue to make fixed-income assets more attractive compared to non-yielding gold.
Investor demand for gold showed signs of stabilization, with global gold ETFs recording net inflows of over 70 tonnes in September. This suggests continued institutional interest despite recent price weakness. Central banks also remain significant buyers, with Bundesbank President Joachim Nagel highlighting geopolitical risks and sovereign debt concerns as reasons to diversify currency reserves. Nagel noted that gold's share of global central bank reserves has risen from 14% in 2023 to nearly 25%, partly due to higher gold prices.
A World Gold Council survey revealed that 45% of responding monetary authorities plan to increase their gold holdings over the next year, the highest reading since the poll began. While higher government bond yields and a firm dollar have pressured gold prices recently, structural shifts in official reserve buying are helping to offset some of this pressure. Analysts like Kyle Rodda of Capital.com point to geopolitical tensions in the Middle East as a potential driver for safe-haven demand in the near term.