Spot gold approached the $4,300-an-ounce level on Thursday, with international gold prices rising for a fourth consecutive trading day. According to a Wall Street Journal report cited by ABMedia, the rebound may be tied to unexpectedly weak U.S. ADP employment data for July, easing conflict in the Middle East, and continued gold buying by global central banks in the second quarter.
Weak ADP payrolls lifted rate-cut expectations
The U.S. July ADP private employment report showed that only 44,000 jobs were added during the month, far below market expectations of roughly 70,000. After the release, the U.S. dollar index and U.S. Treasury yields both moved lower, while market pricing for a Federal Reserve rate cut in September strengthened.
A lower rate outlook reduces the opportunity cost of holding gold, and that is seen as one of the main drivers behind the latest move higher in spot prices.
Central bank demand stayed firm in the second quarter
Data from the World Gold Council showed that global central banks bought a combined 289 metric tons of gold in the second quarter, up 62% from a year earlier. Among them, South Korea’s central bank resumed domestic gold purchases for the first time in 13 years.
The market has interpreted that move as part of a broader reallocation of foreign exchange reserves by South Korea. After sharp swings in the KOSPI index, the South Korean government may be seeking a more conservative fiscal approach.
China gold ETFs saw 14 straight days of net inflows
Gold ETFs in China have recorded net inflows for 14 consecutive days. The market has linked part of that flow to the sell-off in Chinese technology stocks during July.
As volatility in equities increased, some funds shifted into gold positions that are viewed as carrying no counterparty risk, creating a visible rotation in asset allocation.