Gold's Steepest Weekly Selloff in Months Pits Hawkish Fed Bets Against Central Bank Stockpiling

A blockbuster US labor market report unleashed a brutal selloff in gold last week, sending the precious metal to its lowest level since the March rout. The spot price tumbled 3.33% on Friday alone to close at $4,352.90 per ounce, racking up a weekly loss of 4.75% — its sharpest weekly decline in several months. The catalyst: 172,000 new jobs were added in May, comfortably beating market expectations and reviving speculation that the Federal Reserve may raise interest rates again before year-end.

For an asset that pays no yield, a hawkish Fed is poison. The dollar surged and bond yields climbed in the wake of the data, delivering a double blow to gold. The technical picture deteriorated sharply as the metal sliced through its 200-day moving average and dropped below the psychologically significant $4,500 threshold. The relative strength index now sits at 34.4, deep in oversold territory but yet to flash a clear buy signal.

On the downside, gold is testing its year-end support at around $4,319. If that level fails to hold, attention quickly shifts to $4,280 and then the $4,100 area, with some analysts even eyeing a potential retest of the round $4,000 mark. On the upside, the metal must first reclaim resistance at $4,365 and $4,412 before attempting to challenge the $4,493-to-$4,540 zone. Since touching a 52-week high of $5,626.80 in late January, gold has already shed roughly 23% of its value.

Should investors sell immediately? Or is it worth buying Gold?

Yet the selloff masks a more nuanced picture on the demand side. Central banks have emerged as a consistent source of support. In the first quarter of 2026, global net purchases reached 244 tonnes, up 3% from the same period last year. The buying continued in April, when central banks added a net 17 tonnes after three months of net sales. Poland led the charge with 14 tonnes, while China extended its buying streak to 18 consecutive months. A recent European Central Bank report highlighted that gold’s share of global foreign-exchange reserves hit 27% at the end of 2025, surpassing US Treasuries for the first time — though much of that shift was price-driven rather than deliberate portfolio rebalancing.

Geopolitical tensions provide another floor. Stalled negotiations between the US and Iran, along with Hezbollah’s rejection of a ceasefire proposal, are keeping risk premiums elevated. These factors have underpinned gold since 2022, but in the current environment they are struggling to override the macro headwinds from shifting rate expectations.

All eyes now turn to this week’s US consumer price index and producer price index readings. A hot inflation print would tighten the screws on the Fed and likely send gold careering toward its next support levels. Should the data come in moderate, however, the $4,319 level could hold and trigger a technical bounce toward the resistance zone. Meanwhile, Metals Focus projects global gold demand will edge 2% lower in 2026, weighed down by weaker jewellery consumption and a gradual slowdown in central bank buying — a reminder that even structural supports have their limits.

Ad

Gold Stock: New Analysis - 7 June

Fresh Gold information released. What's the impact for investors? Our latest independent report examines recent figures and market trends.

Read our updated Gold analysis...

en | XC0009655157 | GOLDS | boerse | 69496824 |