Gold and related assets staged a powerful breakout this week, reigniting bull market calls across the precious metals complex. Spot gold surged roughly 2% on Friday to around $4,353 an ounce, its highest level in two months, while miners posted their strongest weekly performance in more than a year. The VanEck Gold Miners ETF (GDX) soared 21.09% over five sessions to close at $89.73, and the VanEck Junior Gold Miners ETF (GDXJ) outpaced its larger peers with a 22.42% weekly jump to $116.78.
The rally was triggered by a stark deterioration in the U.S. labor market. The July nonfarm payrolls report showed the economy unexpectedly shed 23,000 jobs, a sharp contrast to the 83,000 gain economists had forecast. Following the release, the CME FedWatch tool indicated the probability of a rate hike at the September meeting tumbled from 55% to 41.9%. The implied dovish repricing pushed the dollar lower and cleared a rapid upward path for non-yielding gold.
Bullion also drew support from a notable turnaround in exchange-traded fund flows. According to the World Gold Council, global physically backed gold ETFs snapped a two-month streak of net outflows in July, attracting net inflows of 23.5 metric tons worth approximately $2.97 billion. European-listed funds led the recovery with 17.3 tons (roughly $2 billion), as investors treated dips near the $4,000 mark as strategic entry points; UK- and Swiss-domiciled funds together accounted for $1.5 billion of that total. Asian-listed funds continued their steady accumulation, adding 4.8 tons, or $616 million, taking the region’s year-to-date net intake to $11 billion (39 tons) and making it the largest regional contributor globally. North American products registered only a marginal inflow of 0.3 tons.
Central bank buying continued to reinforce the structural floor under prices. The People’s Bank of China expanded its official gold reserves by 20 tons in July—the largest single-month addition since October 2023—and extended its purchasing streak to 21 consecutive months. So far this year, the PBoC has added a net 60 tons, lifting total declared reserves to 2,366 tons. The Czech National Bank also added 1.7 tons in July, bringing its year-to-date purchases to 12 tons. This systematic official-sector demand structurally reduces the risk of a deep correction in bullion.
Mining equities, with their significant operational leverage, emerged as the biggest beneficiaries of gold’s ascent. Agnico Eagle Mines (AEM) leapt 22.92% for the week to C$250.17, Newmont Corporation (NEM) advanced 20.55% to $112.97, and Barrick Mining (ABX) climbed 19.22% to C$61.34. Smaller producers displayed even greater elasticity, helping the heavily junior-exposed TSX Venture Composite Index gain 8% over the same period.
Looking beyond the near term, UBS analysts noted that while short-term trading risks and volatility persist, gold could approach $5,000 per ounce in 2027. With the Federal Reserve pausing rate hikes, central banks continuing to accumulate reserves, and ETF flows pivoting back to positive territory, the gold and gold-miner complex is undergoing a powerful repricing.
Leave a comment