Gold prices were on track for a second consecutive weekly decline on Friday, pressured by a resilient US dollar and Treasury yields hovering near multi-decade highs. Spot bullion traded around $4,184 an ounce in Asian hours, down more than 2% for the week, after touching a seven-week low near $4,110 on Monday. US futures changed hands near $4,215.
The 10-year Treasury yield remained close to 5.23% after peaking at 5.34%, its highest level since 2002. Yields above 5% offer investors an unusually attractive return from government debt, and because gold generates no income, the metal struggles to compete when fixed-income alternatives pay so much.
Why $4,000 keeps holding
Despite the macro headwinds, the market has repeatedly refused to turn $4,000 into a sustained breakdown. The reason appears to lie in the demand base beneath the market. US-listed gold ETFs attracted roughly $3.8 billion in September after pulling in $7.9 billion during August, according to the World Gold Council. That appetite has persisted even as gold posted its worst monthly performance since June.
Globally, gold-backed ETFs added $18 billion in August, the second-largest monthly inflow on record. Holdings climbed by 121 tonnes to a record 4,189 tonnes. Official-sector buying has added another layer of support: China's central bank purchased 20.2 tonnes in August, its largest monthly addition since October 2023 and its 22nd consecutive month of purchases.
That steady demand means sellers have repeatedly found buyers as gold approaches the psychological $4,000 mark.
The Fed and the dollar
A stronger dollar raises bullion's cost for overseas buyers, adding to the pressure from high yields. The Fed threat has eased somewhat, however. Markets now assign only about a 28% probability to an October rate increase, down from roughly 70% earlier this week, though expectations for a December move remain elevated.
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 toward this week's highs and reopen the attack on $4,000.
Bank of America questions the floor
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 toward $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.
This article is for informational purposes only and does not constitute financial advice.
