Gold prices surged nearly 2% to $4,202.80 per ounce on Friday, touching an intraday high of $4,206.70, marking its first weekly gain in five weeks as investors scaled back expectations of Federal Reserve interest rate hikes following softer-than-expected U.S. jobs data. Spot gold was up 1.3% at $4,177.31 per ounce as of 0416 GMT, hitting its highest level since June 23, with US gold futures for August delivery gaining 1.6% to $4,190.70. The weaker payroll numbers have eased inflation concerns, boosting bullion's appeal across precious metals markets. According to CNBC TV18, precious metals generally perform better when interest rate expectations soften, as lower rates reduce the opportunity cost of holding non-yielding assets like gold and silver. The World Gold Council said that central banks were back in buying mode in May and, based on the latest reported data, official gold reserves increased by a net 41 tons during the month.
The Federal Reserve faces its most challenging balancing act in years as U.S. job growth slowed sharply to just 57,000 jobs in June, far below expectations of 110,000 and well below May's revised 129,000 gain. According to CNBC TV18, the latest US nonfarm payrolls report showed the economy added only 57,000 jobs last month, far below market expectations of 110,000. The unemployment rate edged down to 4.2% versus an expected 4.3% and May's 4.3%, providing some positive economic news. However, inflation remains stubbornly high at 4.1%, more than double the Federal Reserve's target, leaving policymakers trapped between economic weakness and persistent price pressures. This nightmare scenario of slowing growth and elevated inflation has fundamentally altered the traditional relationship between economic weakness and monetary easing, with investors now questioning whether the Fed can cut rates at all given current inflation levels.
The Federal Reserve's hawkish pivot has fundamentally altered gold's outlook, with the FOMC unanimously voting 12-0 to keep rates unchanged on June 17-18 under new Chairman Kevin Walsh. The subsequent dot plot revealed that 9 of 18 officials expect at least one rate hike in 2026, while only 1 foresees room for cuts this year. This represents a dramatic shift from March when no one expected a 2026 hike and 7 anticipated cuts. The expected median policy rate at end-2026 rose sharply from 3.4% in March to 3.8%, with CME FedWatch showing the probability of a September rate hike surging from 29% to 68% after the meeting. However, following the latest jobs data, traders are now pricing in roughly a 54% chance of a rate hike in September, down from 66% before the data, according to the CME FedWatch Tool. Goldman Sachs has responded by cutting its end-2026 gold target from $5,400/oz to $4,900/oz, warning that further Fed hikes could push prices to $4,400/oz.
The US dollar was headed for its largest weekly decline in nearly three months, as softer economic data reinforced expectations of a more dovish Federal Reserve, lending support to bullion prices and providing relief to major currencies, including the Japanese yen. According to Moneycontrol, commodity markets traded firm on July 4, with gold extending its rally on the back of softer-than-expected US jobs data and a weaker dollar. The dollar was headed for a weekly drop, making greenback-priced bullion more affordable for holders of other currencies, as noted by Kelvin Wong, a senior market analyst at OANDA. Higher interest rates typically weigh on non-yielding gold, as they make interest-bearing assets more attractive, but the current environment shows the traditional relationship between economic weakness and monetary easing has become considerably less straightforward. The US Dollar Index eased on weaker-than-expected NFP report, trading at 100.79, down 0.6% for the day, with two-year US yields at 4.12% down 1% for the day.
Gold prices in India moved up by 1.23% on July 3, 2026, with 24K gold at ₹147,690 per 10 grams, reflecting a gain of ₹1,790 compared to its previous close. 22K gold is at ₹135,383 per 10 grams, while 18K gold prices at ₹110,768 per 10 grams. According to The Financial Express, gold prices in India continue to remain higher than in Dubai, with 24K gold in India at ₹147,690 per 10 grams, while in Dubai it is ₹132,361, reflecting a difference of ₹15,330 or 11.58%. Gold prices in India are largely influenced by international spot gold rates, US dollar fluctuations, and import duties on Gold among other things. The yellow metal also gained momentum as the probability of a rate hike by the US Federal Reserve fell to 50% from 67%, with lower oil prices also adding to the price gains as they eased mounting inflationary pressures. Analysts suggest gold prices to trade with a positive bias over the near-term as progress in the US-Iran negotiations helped bring crude prices to pre-war levels.
