Gold Climbs Back Toward $4,200 as Weak Jobs Report Hammers Rate Hike Odds and Dollar Slides Friday

Gold futures climbed sharply Friday morning, approaching $4,200 per ounce and extending a two-day recovery that has erased a significant portion of the month-long selloff driven by the escalation of the U.S.-Iran conflict and its knock-on effect on inflation expectations and Federal Reserve policy pricing.

The August gold contract was trading at $4,179.30 as of 9:45 a.m. EDT, up $53.60, or 1.30%, on the session, building on Thursday’s 1.47% advance and pushing the metal toward a level it has not closed above since early June. The gains came on an abbreviated pre-holiday session ahead of the Fourth of July weekend, with U.S. equity markets already closed for the day and trading volume in commodity markets running below normal as market participants wound down for the long weekend.

Gold climbed toward $4,200 an ounce on Friday, extending gains from the previous session as weaker-than-expected U.S. jobs data prompted traders to scale back bets on Federal Reserve rate hikes. The U.S. economy added just 57,000 jobs in June, the fewest in four months and well below forecasts of 110,000, while the unemployment rate stood at 4.2%.

That followed a report on Wednesday showing private-sector job growth also came in below expectations. Fed funds futures now imply roughly a 50% chance of a September rate hike, down from 67% before the latest employment data.

That shift in rate expectations is directly consequential for gold, which competes with interest-bearing assets for investment capital. When the probability of higher rates falls, the opportunity cost of holding non-yielding gold declines, making the metal more attractive to institutional and retail investors simultaneously. Treasury yields have fallen meaningfully over the past two days in response to the jobs data, providing the mechanical backdrop for gold’s recovery even before considering the metal’s safe-haven and inflation-hedge dimensions.

Meanwhile, gold drew additional support from lower oil prices and easing inflation concerns as commercial shipping through the Strait of Hormuz continued to recover amid progress in U.S.-Iran talks.

The commodity price channel matters here beyond oil’s direct effect. When crude oil prices fall, headline inflation expectations ease, which in turn reduces the urgency for the Federal Reserve to tighten further. Lower inflation expectations narrow the real yield advantage that interest-bearing assets hold over gold, again supporting the metal’s price. The combined effect of a weak jobs report, falling oil prices and reduced rate hike probability has created a rare triple tailwind for gold heading into the holiday weekend.

Friday’s move is a recovery trade set against a backdrop of a dramatic 2026 so far for precious metals. Gold surged past $5,100 per ounce in January 2026, marking a record high that captivated investors worldwide. The metal had gained an extraordinary 64% throughout 2025, breaching both the $3,000 and $4,000 thresholds for the first time in history.

Gold entered 2026 in spectacular fashion, surging to an all-time high of $5,595 per ounce on January 29, 2026. By the end of the first half, however, the picture had changed materially. The U.S.-Iran military conflict that escalated in late February 2026 proved paradoxically bearish: rising oil prices supercharged inflation expectations, prompting markets to price out Fed rate cuts and even assign a roughly 50% probability to at least one rate hike by year-end.

The roughly 24% peak-to-trough decline from the January all-time high to the recent floor near $4,170 per ounce represents one of the more significant corrections in gold’s multi-year bull run, even as the metal remains substantially higher than it traded just one year ago, when prices were closer to $3,303 per ounce. The correction is also the kind of volatility that both major investment banks and independent analysts have flagged as characteristic of a market processing genuinely conflicting macro signals rather than one experiencing a fundamental breakdown in its long-term demand thesis.

Wall Street’s longer-term outlook for gold remains constructive despite the correction. “Structurally, EM central bank diversification — following the 2022 freezing of Russia’s reserves — remains the anchor of our $4,900 per ounce end-2026 forecast,” said Lina Thomas, a Goldman Sachs researcher. The bank also noted that a recent World Gold Council survey said a record 45% of the 76 central banks surveyed between February and May expect to increase their own gold reserves over the next 12 months.

JPMorgan has gone further, forecasting prices per ounce to average $6,000 by the final quarter of 2026. Greg Shearer, head of Base and Precious Metals at JPMorgan, has described the metal as stuck in technical no-man’s land, trading above the 200-day moving average while capped below the 50-day moving average, but noted that the structural demand case, led by central bank diversification away from dollar assets, remains intact.

Precious metals have plummeted since the war in Iran began in late February, with gold prices falling by roughly 24%. Year to date, bullion is down more than 6% after reaching a record high in late January.

That year-to-date decline sits alongside a 25% gain over the trailing 12 months, a combination that reflects just how sharp the January peak was and how significant the subsequent correction has been in absolute dollar terms even as the longer-term uptrend remains intact.

The holiday weekend’s compressed trading environment means the next major price catalyst for gold will likely arrive when markets reopen Monday, July 6, when investors will be assessing the full weight of this week’s employment data, any new developments from the Doha negotiations between U.S. and Iranian officials, and whether the momentum built during Thursday and Friday’s sessions translates into sustained buying or represents merely a short-covering bounce ahead of the Fourth of July break.