Happy Friday, traders. Welcome to our weekly market wrap, where we take a look back at these last five trading days with a focus on the market news, economic data, and headlines that had the most impact on gold prices and other key correlated assets—and may continue to in the future.
Here's what you need to know:
- Gold prices rallied this week, holding the risk balance just above $4,500/oz and looking poised to close with a healthy gain near $4,750/oz. Traders are now watching whether the yellow metal can finish Friday above roughly $4,720/oz, its 50-day moving average.
- The primary driver was renewed optimism around the tenuous ceasefire between the US, its allies, and Iran, along with the possibility of a near-term peace agreement and a reopening of the Strait of Hormuz.
- Softer bond yields and a weaker US Dollar helped lighten pressure on gold, while continued central-bank demand from the PBOC and others provided a broader floor for the physical market.
- Next week, attention turns to Tuesday's US consumer inflation print, which is expected to show continued downstream effects from the Iran War and the effective closure of shipping lanes through the Strait of Hormuz.
So, What Kind of a Week Has It Been?
Propelled by a return to optimism around the currently tenuous ceasefire between the US, its allies, and Iran, and the potential for a peace agreement in the near term, gold prices have rallied this week around the risk balance just above $4,500/oz and look poised to close the week with a healthy gain near a spot price of $4,750/oz.
Iran Ceasefire Optimism Softens the Dollar and Yields
With a peace proposal currently on the table from Washington, markets and the broader global community continue to wait for Iran's response, despite a flare-up in the Strait of Hormuz late this week that has tested the current ceasefire. Still, markets are already pricing in a resolution and reopening of the Strait in the coming weeks. As a result, bond yields and the US Dollar have softened throughout the week's trading. Gold has taken advantage of the lighter pressure from its inverse-trading relationship with both assets, but the yellow metal primarily has rallied on the attendant projections for lower inflation in the medium term, which imply a greater potential for interest rate cuts to remain in play for 2026.
Central-Bank Demand Keeps a Floor Under Gold
Central banks around the world also continue to provide general support to the gold market, as the PBOC in China and several others continued to push a strong flow of orders into the physical gold market last month. This is expected to put a solid floor in for gold prices, although whether that floor is aligned as high as the technical floor of $4,500/oz is difficult to confirm.
The April Jobs Report Lands in a Gold-Friendly Middle Ground
In the US, the key data point on offer this week was Friday's April Jobs Report. Following an unexpectedly strong showing at the end of Q1, the consensus estimate this week was looking for just 60,000 jobs added to the US economy. This weaker showing would have been considered just fine for gold buyers, as the implication of a slower labor market would dampen the odds of the Federal Reserve hurriedly reacting to Iran War-related inflation pressures by hiking interest rates. The headline NFP number outperformed again, however, coming in on Friday at +115K and revising March's number even higher. Still, the number lands in a "win-win" position for both gold's investors and traders positioned in more risk-on assets like US stocks: It is a strong enough performance for the US labor market to allay any immediate recessionary fears, but not so strong that it would make the FOMC much more amenable to hiking rates this year.
Looking Ahead
For the remainder of Friday's trading, investors and managers will be tracking whether gold manages to close the week above $4,720/oz, roughly the 50-day moving average for the precious metal. A close below the line would imply that the current ceiling for prices sits somewhere lower than $4,800, while a higher close puts gold in a better position to move higher next week. Just before the upcoming Tuesday session, we'll get the latest print on US consumer inflation, which is expected to show continued downstream effects of the Iran War and the effective closure of shipping lanes through the Strait of Hormuz.
In the meantime, traders, I hope you can get out and safely enjoy your weekend for the next couple of days. After that, I'll see you back here next week for another market recap.
