Gold Prices Rebound After Four Weeks of Decline

Jakarta, CNBC Indonesia - Global gold prices closed the final trading session of the week in positive territory. The precious metal strengthened after weaker United States (US) labour data eased expectations of a near-term Federal Reserve interest rate hike. Based on Refinitiv data, world gold prices on Friday (3/7/2026) closed up 1.26% at US$4,174.9 per troy ounce. The increase marked a three-day winning streak. On a weekly basis, world gold prices also rose 2.12%. This performance is significant as it managed to break a weakening trend in world gold that had lasted for four consecutive weeks. The main boost came from US labour data that was weaker than expected, thereby dampening market expectations that the Fed would soon raise interest rates. Data released on Thursday showed US non-farm payrolls only added 57,000 jobs in June 2026. This figure was far below the forecast of 110,000 additional jobs. The data signalled that the US labour market is beginning to lose momentum. This condition led market participants to believe the Fed has more room to hold off before raising interest rates again. Han Tan, Chief Market Analyst at Bybit, assessed that the gold rally was driven by the sharp slowdown in US hiring last month. According to him, the positive price reaction for gold is quite reasonable for now, as the market is reducing bets on the chance of a Fed rate hike in September. Based on the CME FedWatch Tool, market participants now estimate the probability of a Fed rate hike in September at around 54%. This figure is down from 66% before the US labour data was released. For gold prices, the easing of rate hike expectations is a positive sentiment. This is because gold does not offer a yield. When interest rates rise, gold’s appeal typically diminishes as investors tend to look at other assets that offer higher returns. Conversely, when the likelihood of a rate hike decreases, the opportunity cost of holding gold also falls. This makes gold more attractive again in the eyes of investors. Apart from the interest rate factor, a weakening US dollar also helped support gold prices. The US dollar was on track for its biggest weekly decline since April following the release of the labour data. A weaker dollar makes gold, which is priced in the US currency, cheaper for holders of other currencies. This condition usually helps boost demand for gold in the global market. Another positive sentiment came from gold purchases by central banks. Data from the World Gold Council released on Thursday showed that central banks globally added a net 41 metric tonnes of gold to their reserves in May. Central bank buying remains an important pillar for gold prices in the long term. Tan assessed that central banks are expected to remain a pillar of gold demand going forward, even though some central banks have recently also sold part of their gold holdings to help maintain the stability of their respective currencies. In the physical market, gold demand in India weakened this week as prices rose again. Meanwhile, buying interest in China improved slightly. This condition shows that the gold market is still supported by a combination of global sentiments. On one hand, the weakening US labour data and the falling dollar provide room for gold to rebound. On the other hand, already high prices are causing physical demand in some countries to be somewhat restrained. Looking ahead, the direction of gold will still be largely determined by US economic data, especially inflation and the labour market. If economic data continues to weaken, expectations for a Fed rate hike could fall further and provide additional strength for gold. However, if inflation heats up again or Fed officials signal a hawkish stance, the room for gold to rise could be limited again.