Weekly Gold Review: Nearly $230 Swing in One Week! Gold Prices Stage a "Roller Coaster" Trend as Wall Street's Three Camps Clash Fiercely

Spot gold experienced another week of significant volatility: amid declining U.S. Treasury yields, a weaker dollar, and dovish signals from Federal Reserve officials, gold prices staged a strong rebound mid-week. However, after the stronger-than-expected August non-farm payrolls data, market bets on a Fed rate hike in September quickly intensified, causing gold to give back most of its gains on Friday and ultimately closing slightly lower on the week.

Spot gold opened Sunday evening at $4,439.15 per ounce, then faced pressure as traders continued digesting the sharp decline from the previous week, elevated U.S. Treasury yields, and inflation concerns stemming from oil prices and the U.S.-Iran conflict. Early Tuesday morning, the downward momentum accelerated, with prices briefly breaking below $4,300 to hit the week's low of $4,282.61 before buyers stepped in.

Gold prices began recovering Wednesday and surged further Thursday following weaker-than-expected U.S. private sector employment data, declining Treasury yields, and less hawkish remarks from Federal Reserve Governor Christopher Waller. Spot gold briefly reclaimed the $4,500 level and hit the weekly high of $4,511.08 on Thursday.

However, this rebound suffered a major blow during Friday's early session. The U.S. Department of Labor reported that August non-farm payrolls increased by 162,000, significantly above market expectations, with the unemployment rate holding steady at 4.1%. The robust employment data drove the dollar and short-term U.S. Treasury yields higher, reigniting rate-hike trades. Gold prices plummeted within minutes of the data release, dipping to an intraday low of $4,365.57.

As of Friday afternoon, spot gold had recovered some of its post-payrolls losses but failed to reclaim the $4,500 level again, currently trading at $4,429.63, down slightly for the week overall.

Wall Street and Retail Investors Grow More Divided

Following the wild price swings, the latest Kitco News weekly gold survey shows a clear divergence between Wall Street analysts and retail investors, with bulls, bears, and those on the sidelines nearly evenly matched. Meanwhile, retail investors reduced their bullish bets after gold failed again to break higher.

On the investment strategy front, 16 analysts participated in this week's Kitco Gold Survey, with 6, or 38%, expecting higher prices next week; 5, or 31%, anticipating further declines; and another 5, or 31%, expecting choppy sideways trading. Meanwhile, the online poll received 220 votes, with retail bullish sentiment falling to 55%. A total of 120 traders expected gold to rise next week; 53, or 24%, were bearish; and 47, or 21%, expected gold to consolidate or trade in a directionless range.

Marc Chandler, Managing Director at Bannockburn Global Forex, noted that gold was already relatively weak following the previous weekend's performance and saw a notable drop mid-week last week. Technicals remain weak, and momentum indicators are declining. He believes that if gold breaks below the $4,280 area, it could signal the next leg down, potentially targeting around $4,200.

Darin Newsom, Senior Market Analyst at Barchart.com, takes a bearish stance. He pointed out that gold's trajectory largely depends on how significant the post-payroll decline was on Friday. August non-farm payrolls added 162,000 jobs, exceeding pre-release market estimates by more than 100,000, which makes the U.S. economy look "better than it actually is." However, he believes this data will likely be revised in the coming months, giving it limited long-term significance. Newsom added that if gold does not experience further "crash" before the U.S. three-day holiday weekend, it could still retest this week's low around $4,396.40, while the 45-day moving average remains significantly below current levels, near $4,320.

Adrian Day, President of Adrian Day Asset Management, believes gold will likely remain range-bound in the near term, lacking clear direction as the market awaits the Fed's rate decision in less than two weeks. While the strong jobs data supports a rate hike and market participants are betting on this outcome, he emphasizes that the final decision is not a foregone conclusion, as the Fed has historically tended to avoid major decisions before elections. Day also noted that economic data released in the coming days, particularly the August Consumer Price Index (CPI) in the days leading up to the Fed meeting, will influence the rate decision and subsequently impact gold's trajectory.

Rich Checkan, President and Chief Operating Officer of Asset Strategies International, holds the opposite view, believing that while the jobs data temporarily weighed on gold, more supporting factors lie ahead. He pointed out that even as market concerns about rate hikes intensify, the debt scale continues to expand, so gold's long-term path remains upward.

Market Focus on Interest Rates and Inflation

Kevin Grady, President of Phoenix Futures and Options, said gold and the broader market are currently almost entirely focused on interest rates. He believes the strong non-farm data means the possibility of "maintaining current rates" has further decreased, with the market reading the data as "higher rates." Grady judges that if the Fed truly wants to raise rates this fall, it must act at the upcoming meeting. He also mentioned that the market will continue monitoring economic data and energy markets, as energy prices are a significant source of inflation.

Grady also believes Waller's Thursday remarks were merely his personal view and do not represent the overall stance of the Federal Open Market Committee (FOMC). He said that besides next Friday's CPI, energy markets will also be an important clue for judging the Fed's next move, especially crude oil prices, because the inflation narrative largely originates from energy markets.

He noted that the Fed has historically viewed rising oil and gas prices as temporary factors, but once such pressures begin to show up in broader inflation data, policymakers have no choice but to take more aggressive action.

With next week shortened by a U.S. holiday, the economic data focus will be on inflation indicators, while the market will also watch manufacturing and services surveys, as well as interest rate decisions from two central banks. On Thursday morning, the European Central Bank (ECB) will announce its monetary policy decision, with markets having priced in rate hike expectations due to persistently elevated energy prices pushing up eurozone consumer prices. On the same day, the U.S. August Producer Price Index (PPI) and existing home sales data will also be released. Friday will bring the August CPI, along with the preliminary September University of Michigan Consumer Sentiment Index.

Institutional Views Split: Bearish, Bullish, and Watchful

David Morrison, Senior Market Analyst at Trade Nation, is short-term bearish on gold, believing momentum indicators suggest prices could test support near $4,200. He reminds that this time last year, gold was still struggling to break through $3,500, and earlier, the $2,000 level was considered an unattainable target. Morrison said gold is still battling the dollar, which is being supported by rate hike expectations; if rate hike expectations are again priced out of the market, the dollar's suppression on gold will ease.

Adam Button, Head of FX Strategy at investingLive, said every data point between now and this month's rate decision will be used by the market to judge the Fed's next move, with Friday's payrolls being no exception. He noted that the market still hasn't fully seen how "a Fed under Warsh" will operate; after the Jackson Hole meeting, the market briefly believed a rate hike was imminent, but Waller strongly pushed back the next day, keeping rate hike probabilities hovering around 40% to 60%.

Button believes the non-farm report had virtually no obvious flaws, enough to convince Fed officials concerned about the labor market to accept a rate hike. He also said the market is now highly focused on the September 16 Fed meeting, and the Labor Day long weekend could affect Friday trading, with some short-term funds potentially closing positions before the weekend.

Button emphasized that gold prices will continue to fluctuate around rate expectations until the Fed provides a clear answer. He believes if the Fed raises rates, it will be bearish for gold; if it doesn't, it will be bullish for gold—the logic is straightforward. He also noted that Friday's strong jobs data makes next week's CPI even more important, as even a 0.1 percentage point difference in inflation data could lead to completely different market reactions.

Button also mentioned that gold rallied sharply following Waller's remarks on Thursday before being slammed on Friday, then recovered somewhat—suggesting underlying buying interest is emerging. He brought up discussions about Norway selling U.S. bonds, believing the era of "unlimited demand" for Treasuries may be over, and that central banks rebuilding gold reserves will be a long-term trend throughout the remainder of the 21st century, just varying in pace.

Alex Kuptsikevich, Senior Market Analyst at FxPro, expects gold prices to rise next week. He noted that gold has suffered blows for the second consecutive Friday, both due to market reassessing key Fed rate expectations. Previously, Waller expressed inflation concerns, and other FOMC members' comments helped gold recover some losses; but Friday's strong August payrolls and significant upward revisions to weak July data have once again increased the likelihood of September tightening.

Kuptsikevich pointed out that over the past seven days, gold has fallen 5% and broken back below its 200-day moving average, but this has not yet broken the uptrend that precious metals have formed over the past month and a half. Since the beginning of this month, gold has consistently attracted buying support during intraday pullbacks, with the 50-day moving average once again acting as support. He believes strong economic data is not the biggest threat to gold; after short-term shocks, strong data may actually reinforce gold's fundamentals over the medium term. Additionally, bond selling and uncertain stock market prospects could prompt investors to seek alternatives to dollar-denominated assets.

CPM Group issued a "Stand Aside" recommendation for gold on Friday, forecasting a trading range of $4,320 to $4,670 between September 7 and 16. The firm stated that gold and other precious metals prices have been extremely volatile recently, which may continue over the next two weeks as market participants swing back and forth on their views of U.S. interest rates. Next week, the market will focus on August PPI and CPI: if inflation eases, the market will think the Fed may not raise rates on September 16; if inflation remains elevated, rate hike expectations will intensify.

CPM Group also expects market volatility to intensify around the September 16 Fed rate announcement and the subsequent press conference by Chairman Warsh. The firm noted that the market is roughly split down the middle, with expectations that the Fed will either raise rates by 25 basis points or hold steady on September 16. Analysts pointed out that a 25 basis point rate hike will not truly curb inflation but would demonstrate the new Fed Chair's hawkish stance, potentially pressuring precious metals prices in the short term.

However, CPM Group maintains a bullish outlook on gold's medium-term prospects, believing there are multiple political and economic factors supporting precious metals gains. The firm also warns that over the next two weeks, higher rates and rate expectations may continue to weigh on gold prices, with short-term downside risks remaining. Therefore, in capital-protected trading recommendations with stop-losses, the current approach is to stand aside. Without stop-losses, from a very short-term perspective, prices could still dip multiple times over the next two weeks.

Michael Moor of Moor Analytics expects gold to move higher again next week. In his technical analysis, he listed key levels and "OFF HOLD" and "ON HOLD" signals across multiple timeframes, noting that gold has shown signs of rebounding from lows and re-strengthening on higher timeframes. On medium-term and short-term frameworks, if currently in a genuine bullish correction phase, gold still has minimum upside target room. Moor also mentioned that recent multiple key breakout and reversal levels have triggered corresponding upward or downward pressure signals, indicating that gold's short-term volatility remains elevated.

As of press time, spot gold was trading at $4,429.83 per ounce, down 0.36% for the week and down 0.96% for the day.

The market will now focus on next week's U.S. inflation data, particularly whether CPI will further reinforce or undermine September rate hike expectations. If inflation continues to run hot, the dollar and short-term Treasury yields may find support, keeping gold under pressure; conversely, if inflation eases, gold could regain buyers' favor.