Gold prices headed for a second straight weekly decline on Friday as a firm dollar and historically high US Treasury yields kept pressure on bullion, yet the market is again refusing to turn $4,000 into a sustained breakdown.
Spot gold traded around $4,184 an ounce in Asian hours and was down more than 2% for the week, after touching a seven-week low near $4,110 on Monday.
US futures traded around $4,215. The 10-year Treasury yield, meanwhile, remained near 5.23% after reaching 5.34%, its highest since 2002.
Five percent yields should hurt more than this
Gold’s resilience is notable because almost every short-term macro force is moving against it.
A stronger dollar increases bullion’s cost for overseas buyers, while Treasury yields above 5% provide investors with an unusually attractive return from government debt. Gold pays no income.
The Fed threat has eased, however. Markets now assign only about a 28% probability to an October rate increase, down from roughly 70% earlier this week, although expectations for a December move remain high.
Friday’s employment report is therefore crucial. Economists expect September payroll growth to slow to about 90,000 from 162,000.
A stronger report, particularly alongside firm wages, could push yields back towards this week’s highs and reopen the attack on $4,000.
Investors keep rebuilding positions near $4,000
The reason gold has been difficult to break may lie in the demand underneath the market.
US-listed gold ETFs attracted about $3.8 billion in September after taking in $7.9 billion during August. That continued appetite has survived even as gold recorded its worst monthly performance since June.
Globally, gold-backed ETFs added $18 billion in August, the second-largest monthly inflow on record. Holdings rose by 121 tonnes to a record 4,189 tonnes, according to the World Gold Council.
Official-sector demand is providing another layer. China’s central bank bought 20.2 tonnes in August, its largest monthly addition since October 2023 and its 22nd consecutive month of purchases.
That persistent demand means sellers have repeatedly found buyers as gold approaches the psychological $4,000 mark.
But the floor is not guaranteed
Bank of America is questioning how durable that support will be.
Analysts at the bank said in research that current investment demand is roughly consistent with gold around $4,000, but they forecast prices could fall towards $3,750 in the fourth quarter if elevated energy costs keep inflation and yields high.
They also warned that positioning could unwind quickly if investors lose confidence in the longer-term bullish case.
That creates a clear dividing line. ETF flows, central-bank purchases and lower near-term Fed hike odds are defending $4,000. Five-percent Treasury yields, a strong dollar and expensive oil are attacking it.
Friday’s payrolls report may determine which side gets the next serious attempt.
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