On the morning of July 6 (UTC+8), spot gold continued its upward momentum, breaking above $4,200 per ounce during trading and rising more than 0.6%. At the time of publication, spot gold was quoted at $4,189.54 per ounce. Over the previous week, gold rebounded strongly after four consecutive weeks of decline, posting a weekly gain of over 2%.
Silver also delivered impressive performance. As of July 6, spot silver was quoted at $61.8 per ounce, having touched an intraday high of $63.25. Last week (June 29 to July 5), spot silver surged approximately 5.52%, ending several weeks of prior correction.
Why have precious metals rallied collectively in this cycle? Is this rebound a short-term technical recovery, or does it signal a trend reversal? What does the divergent performance between gold and Bitcoin under the same macro shocks reveal about asset allocation strategies?
How Weak Nonfarm Payroll Data Is Shaping Fed Rate Hike Expectations
The most direct catalyst for this precious metals rally was the release of US June nonfarm payroll data on July 2. According to the US Bureau of Labor Statistics, only 57,000 new jobs were added in June, far below the market expectation of 115,000. After revisions, the previous two months saw a combined reduction of 74,000 jobs. Although the unemployment rate fell from 4.3% to 4.2%, this was mainly due to a shrinking labor force—participation among 25- to 34-year-olds dropped by 700,000 in a single month.
This data is significant for gold because it systematically altered market expectations for the Fed’s policy trajectory. Throughout the first half of 2026, pricing for the Fed’s rate hike path underwent several shifts. The weak June payroll numbers dealt a major blow to the previously warming narrative of rate hikes.
According to CME "FedWatch," the probability that the Fed will keep rates unchanged at the July meeting stands at 82.4%, while the chance of a 25-basis-point hike is just 17.6%. Swap markets show the likelihood of a rate hike at the next meeting has dropped from one-third earlier this week to 18%. The market currently expects a 52% chance of a hike at the September meeting, down from 64% the previous trading day.
Cooling rate hike expectations impact gold prices through two main channels: First, the real interest rate channel—gold, as a non-yielding asset, has its holding cost directly linked to real interest rates. Lower rate hike expectations push down nominal rates, real rates follow, and gold’s appeal rises. Second, the dollar exchange rate channel—diminished rate hike expectations weaken the dollar’s yield advantage, putting pressure on the dollar index. This makes dollar-denominated gold cheaper for holders of non-dollar currencies.
How Geopolitical Risks Provide Premium Support for Precious Metals
While nonfarm payroll data acted as the "trigger" for this rebound, geopolitical risks form the underlying logic that continues to provide premium support for precious metals.
The World Gold Council’s "2026 Global Gold Market Mid-Year Outlook" released on July 1 highlighted that the primary driver of gold prices in the first half of the year was rising geopolitical risk, with US-Iran tensions being particularly influential. The complex interplay of US-Iran ceasefire negotiations, control of the Strait of Hormuz, and domestic US political and economic struggles is creating a textbook macro scenario, offering strong foundational support for gold.
Geopolitical risks have not subsided as July began. Iran’s ambassador to China confirmed Tehran’s plan to impose new service fees on ships passing through the Strait of Hormuz. The Iranian parliament speaker stated that Tehran would not negotiate a final agreement with the US unless every clause of the memorandum of understanding is implemented. These developments indicate that uncertainty in the Middle East continues.
Geopolitical risk supports gold in two ways: First, it directly triggers safe-haven demand, driving capital into gold and other secure assets. Second, it indirectly fuels inflation concerns via energy price transmission, which can influence the Fed’s monetary policy path. For the second half of the year, ongoing geopolitical volatility is expected to keep gold prices in a wide trading range.
Why Gold and Bitcoin Diverge Under the Same Macro Shocks
On July 3, the crypto market also saw a rebound. Bitcoin bounced from a low of $59,776 to $61,507. By July 6, Bitcoin had climbed above $63,000. Expectations of looser liquidity similarly boosted risk asset sentiment.
However, the price reactions of gold and Bitcoin to the same macro shocks underscore their fundamentally different market roles. Since 2026, Bitcoin and gold have continued to diverge—Bitcoin is down about 28% year-to-date, while gold has fallen only about 3.9%.
The root of this divergence lies in the essential difference in their safe-haven characteristics. Gold is the classic "safe-haven currency," performing well during geopolitical conflicts, wars, or systemic crises. Bitcoin, on the other hand, acts more like a high-beta "risk asset" or liquidity-sensitive instrument, heavily influenced by risk appetite and its correlation with US equities, often falling alongside stocks during panic periods. As analysts note, "During times of stress and uncertainty, liquidity preference dominates, and this dynamic hurts Bitcoin far more than gold."
The 1-year rolling correlation between gold and Bitcoin turned negative in February 2026, dropping to -0.17. This means the two assets no longer share exposure to the same macro themes, but instead offer genuine diversification.
Why Silver Is More Resilient in This Rally
Silver outperformed gold in this rally, with a weekly gain of 5.52% compared to gold’s 2.16%. This greater resilience stems from silver’s dual identity as both a financial and an industrial asset.
On the financial side, silver is highly correlated with gold, both belonging to the precious metals safe-haven category. Fed monetary policy expectations are equally crucial for silver’s financial attributes. A weaker dollar and cooling rate hike expectations also give silver upward momentum.
On the industrial side, silver’s widespread use in photovoltaics, new energy vehicles, and electronics means its price is significantly affected by changes in industrial demand. The global silver market has been in supply-demand deficit for several consecutive years, and 2026 is expected to remain structurally short. Although the deficit is narrowing, fundamentals continue to provide a price floor for silver.
The decline in the gold-silver ratio (gold price/silver price) is also noteworthy. As the ratio falls below 67, silver has broken above the $62 mark. The mean reversion logic of the gold-silver ratio—when gold’s gains outpace silver’s, capital flows to the relatively undervalued silver—also helps explain silver’s stronger short-term resilience.
How Central Bank Gold Buying and Institutional Expectations Build a Price Floor
Before this rally, gold endured a challenging first half—falling sharply from a January high of $5,405 to a June low of $4,002, down about 7% year-to-date, with average volatility rising to 30%.
Yet two structural factors are building a price floor for gold.
First is sustained central bank gold buying. A World Gold Council survey shows that central banks increasingly view gold as a tool to hedge against financial crises, inflation, and geopolitical risks, with nearly 90% of respondents expecting global central bank gold reserves to increase over the next year. CNBC analysis points out that central bank buying provides a solid floor for gold around $3,900. In a survey of 74 central banks, 64% expect gold prices to exceed $5,000 per ounce by June next year.
Second is institutional optimism about gold’s long-term outlook. State Street Global predicts gold could reach $5,500 in Q1 2027. CITIC Securities notes that gold and gold stocks have been heavily oversold since the US-Iran conflict, projecting a price range of $4,000–$4,500 per ounce in Q3 2026. Goldman Sachs says "gold’s rally isn’t over yet," characterizing the recent four-month weakness as a consolidation phase after a 123% surge since 2022.
Technical Position and Market Divergence on Gold
Although gold has rebounded significantly from its June low, technical indicators show ongoing market disagreement.
Technically, gold is supported above the 21-day simple moving average (SMA), but the daily relative strength index (RSI) remains bearish. Gold is still trading below the 50-day SMA (around $4,392), 200-day SMA (around $4,488), and 100-day SMA (around $4,628), with dense resistance overhead. Additionally, the 50-day SMA crossed below the 200-day SMA on the weekly close, forming a "death cross" that keeps sellers hopeful.
The core debate between bulls and bears is whether this rebound signals a trend reversal or is merely a technical correction within a downtrend. Bulls argue that weak payroll data combined with geopolitical risk premiums and a full correction in rate hike expectations could push gold back to $4,500–$5,000 per ounce. Bears contend that gold ETF holdings remain well above levels justified by interest rate guidance, with a deviation as high as 10%—a level last seen during the pandemic in 2020 and the Russia-Ukraine conflict in 2022. If sentiment reverses, position unwinding could trigger further pullbacks.
In the short term, whether gold can hold above $4,200 depends on the dollar’s trajectory, developments in the Middle East, and subsequent economic data confirming or refuting rate hike expectations.
Summary
Spot gold is nearing $4,200, up 2.16% for the week, while spot silver surged 5.52%. This strong precious metals rally is driven by two core factors: Weak US June payroll data significantly cooled market expectations for Fed rate hikes, opening upside for gold via lower real rates and a weaker dollar; meanwhile, ongoing geopolitical risks—such as those in the Strait of Hormuz—continue to provide safe-haven premium support.
Notably, gold and Bitcoin continue to diverge under the same macro shocks—gold, as the classic safe-haven asset, benefits from uncertainty, while Bitcoin still exhibits high-risk asset volatility, with their 1-year rolling correlation now negative. Silver, with its dual financial and industrial attributes, has shown even greater price resilience in this rally.
Sustained central bank gold buying and long-term institutional optimism are providing structural support for gold’s price floor, but technical resistance remains dense and market divergence persists. Whether gold can firmly hold above $4,200 and unlock further upside will depend on additional macro signals.
FAQ
Q1: What are the main drivers of the current spot gold rally?
The rally is primarily driven by two factors: First, US June nonfarm payrolls came in far below expectations (only 57,000 new jobs), sharply cooling market expectations for Fed rate hikes and opening upside for gold via lower real rates and a weaker dollar index. Second, ongoing geopolitical risks—such as those in the Strait of Hormuz—continue to provide safe-haven premium support for gold.
Q2: Why has silver outperformed gold?
Silver’s dual identity as both a financial and industrial asset plays a key role. On the financial side, silver, like gold, is boosted by cooling rate hike expectations and a weaker dollar. On the industrial side, silver’s broad applications in photovoltaics and new energy vehicles mean its price is also influenced by changes in industrial demand. The mean reversion logic of the gold-silver ratio drives capital toward the relatively undervalued silver.
Q3: How do gold and Bitcoin differ in their safe-haven attributes?
Gold is the classic "safe-haven currency," performing strongly during geopolitical conflicts and systemic crises. Bitcoin acts more like a high-beta "risk asset" or liquidity-sensitive instrument, heavily influenced by risk appetite and its correlation with US equities, often falling alongside stocks during panic periods. Since 2026, Bitcoin is down about 28% year-to-date, while gold has fallen only about 3.9%, and their 1-year rolling correlation has turned negative.
Q4: What is gold’s current technical position?
Gold has reclaimed the 21-day SMA (around $4,157), but remains below the 50-day SMA (around $4,392), 200-day SMA (around $4,488), and 100-day SMA (around $4,628), with dense resistance overhead. The "death cross" formed by the 50-day SMA dropping below the 200-day SMA continues to pressure bulls.
Q5: What are institutional views on gold’s outlook?
State Street Global forecasts gold could reach $5,500 in Q1 2027; CITIC Securities projects a price range of $4,000–$4,500 per ounce in Q3 2026; Goldman Sachs believes "gold’s rally isn’t over yet," viewing the recent pullback as a consolidation phase after a long-term surge. In a survey of 74 central banks, 64% expect gold prices to exceed $5,000 by June next year.
