Gold experienced a significant rally last week, jumping roughly 7% and marking its best weekly gain since January 2026. This surge was primarily driven by a combination of a weaker U.S. dollar, falling Treasury yields, and an unexpected contraction in employment data, which collectively reduced market fears of aggressive Federal Reserve rate hikes. The nonfarm payrolls data was softer than expected, with private employment climbing by 30,000 and layoffs remaining low, though the headline figure was negatively skewed by a seasonal reduction of approximately 50,000 government education jobs. These macroeconomic shifts prompted investors to seek safety in gold, while also fueling a broader rally in precious metals such as silver, platinum, and palladium. Copper prices remained near their highs during this period as well.
A notable development in the gold market is the People's Bank of China (PBOC) expanding its gold storage in Hong Kong, supporting the city's ambition to become a major international bullion-trading hub. This move is part of a broader trend of repatriating sovereign gold reserves from London to the region and coincides with a 21-month buying streak, with the PBOC adding 20 tons of gold in July 2026 alone.
From a technical perspective, gold remains below its 150-day moving average, but gold miner ETFs such as GDX and GDXJ are approaching this level. Newmont Mining, the largest constituent of the gold miners, has already broken through the 150-day moving average, which may indicate that GDX and GLD could soon follow.
Options traders are also taking note of gold's more symmetric 'Volatility Smile,' where out-of-the-money calls have higher implied volatility than at-the-money calls. This improves the payoff for long call spreads relative to similar strategies in the S&P 500. For example, a November 400/460 call spread in SPDR Gold Shares (GLD) would cost about $16.15, or just over 25% of the difference between the strikes, offering an upside payoff of nearly 3:1 if GLD rallies another 15% over the next 100 days [1].
CONCLUSION
Gold's strong performance last week was fueled by macroeconomic uncertainty and technical momentum, with both institutional and options market participants positioning for further gains. The PBOC's continued accumulation and strategic storage moves underscore robust demand, suggesting that gold may remain a focal point for investors amid ongoing market volatility.