Gold is expected to end its four-week losing streak! But analysts believe that sustained recovery still requires three conditions.

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Gold rebounded this week, showing signs of ending a five-week streak of declines, but analysts warn that whether this recovery will continue depends on several key factors.

In early Friday trading, spot gold prices rose 1.4% to about $4182.28 per ounce, with a weekly gain of 2.3%, likely to record its first weekly increase since the end of May.

The immediate trigger for this rebound was the US June nonfarm payroll data, which fell far short of expectations—slower job growth led the market to sharply lower the probability of a Fed rate hike in September, from about 65% before, to 53.5%.

OCBC Bank strategists stated in their Friday research report that they are "cautiously optimistic" on gold, noting that the nonfarm data helps reduce tail risks of hawkishness, and upgraded their short-term rating from "cautious" to "cautiously optimistic."

They also emphasized that sustained recovery in gold requires a significant decline in real yields, stabilization in ETF and investor demand, and a softening of the Fed's hawkish stance—all three conditions need to be met simultaneously.

Weaker-than-expected jobs data triggers rebound

The direct catalyst for this round of gold rebound comes from US labor market data. The June nonfarm payroll report released Thursday showed the US economy added 57,000 jobs that month, far lower than the revised 129,000 in May and well below the 115,000 consensus forecast by Dow Jones.

After the data release, the market's pricing of a Fed rate hike in September loosened noticeably.

According to CME's FedWatch tool, the market now expects the probability of the Fed raising rates at least 25 basis points in September to drop to 53.5%, compared to about 65% previously. The Fed is expected to keep interest rates unchanged in July.

Weakening jobs data has reignited market speculation about the interest rate path, driving gold and the entire precious metals sector higher.

Gold posts worst quarter in 13 years for the three months ending June

Despite this week's rebound, gold's overall performance this year remains under pressure. Current prices are about 22% below the historical high of over $5300 reached in January, while the quarterly drop ending in June marked the worst in 13 years. Silver is also down about 12% year-to-date.

Gold’s pressure comes from multiple headwinds: persistently high inflation, a strong US dollar, and renewed scrutiny of gold’s safe-haven properties after the US-Iran war broke out in February—all these factors have weakened investors’ willingness to hold gold. So far this year, spot gold has dropped about 3%.

This forms a stark contrast with the brilliance of 2025. In 2025, gold and silver surged by 66% and 135%, respectively, setting records; but in 2026, the market quickly turned volatile, with silver futures posting their largest single-day drop since the 1980s at the end of January.

Sustained recovery requires three conditions

While OCBC strategists have upgraded their short-term rating, their tone remains cautious. They note that although weaker-than-expected jobs data helps suppress hawkish expectations, the current unemployment rate remains stable, Fed officials’ statements are still hawkish, and inflation risks have yet to disappear, which is reason to remain tactically cautious.

Their strategists clearly state that for gold to achieve "a more sustained recovery," three conditions need to be met simultaneously: First, real yields must decline more decisively; second, ETF and investor demand must stabilize; third, the Fed must soften its current hawkish stance. They also say that from a technical perspective, gold’s risk is still tilted to the upside.

"If subsequent US data continues to suppress real yields and the dollar, gold's recovery rally may continue," the bank's strategists said. The market's repricing of the Fed's path may have opened a window, but whether it becomes a trend remains to be validated by multiple factors.

Risk warning and disclaimerThe market involves risks; investments need to be made cautiously. This article does not constitute personal investment advice and does not take into account the specific investment objectives, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article are suitable for their particular situation. Investment is at your own risk. ```