Gold and silver pulled off a sharp comeback last week, breaking a losing streak that had dragged on for weeks and posting their first weekly gains since May. Spot gold climbed back from an eight-month low of around $3,934/oz to touch $4,185/oz — a gain of roughly 2% for the week. Silver did even better, jumping nearly 5% as it recovered from seven-month lows to trade above $62/oz again.

What drove this turnaround? Mostly one thing: a much weaker-than-expected US jobs report that completely changed how markets were thinking about interest rates. It knocked the dollar down a peg, even as central banks kept buying gold and ETF investors kept pulling money out — two forces quietly pulling in opposite directions beneath the surface.

The real trigger came on Thursday, when the June US payrolls report landed far below expectations. Employers added just 57,000 jobs, compared to the roughly 110,000 economists had predicted — the weakest showing in four months. To make matters worse, hiring figures for April and May were revised down by a combined 74,000 jobs. The unemployment rate did tick down to 4.2%, but not for a good reason — it fell because discouraged workers simply gave up looking for work, not because more people found jobs. Markets had already gotten a hint of this weakness on Wednesday, when the ADP private payrolls report also came in soft.

New Fed Chair Kevin Warsh added fuel to the shift. Speaking at the ECB’s forum in Sintra, he said inflation expectations were cooling and that there was no rush to raise rates further, while still emphasizing the Fed’s long-term commitment to price stability. Traders reacted fast: the odds of a September rate hike, priced into Fed funds futures, dropped from about 67% before the jobs data to roughly 50% afterward. That’s a meaningful shift, and it removed one of the biggest obstacles standing in the way of gold and silver, which don’t pay interest and tend to struggle when rates are expected to rise.

Geopolitics added another layer of tension.

Even though the US and Iran have reached a fragile interim agreement, worries over the Strait of Hormuz haven’t gone away — Iran appears to be tightening its grip on this critical shipping route. Over the weekend, Iran’s ambassador to China said Tehran plans to start charging new fees on ships passing through the strait. The US quickly rejected the idea. This unresolved standoff is keeping a geopolitical risk premium alive in the market and helped the dollar find its footing again as the new week began — a development that could put pressure on gold.

The dollar index (DXY) had its worst week since April, sliding to around 100.78 by Friday and snapping a two-week winning streak, as the weak jobs data forced traders to rethink the Fed’s next moves. The Indian rupee had a bumpier ride: it slipped to a three-week low near 95.6 per dollar midweek, pressured by importers and oil companies buying dollars, along with continued selling of Indian equities by foreign investors — even with the RBI stepping in to support the currency in both spot and offshore markets. As the dollar softened toward the end of the week, the rupee clawed back some ground, closing near 95.34, though it still finished the week weaker overall.

Central banks, meanwhile, are playing a completely different game — one focused on the long term. According to World Gold Council data, official gold reserves grew by a net 41 tonnes in May, even after Turkey sold 60 tonnes in the first quarter. This highlights an interesting split in the market: while short-term Western ETF investors have been selling, central banks are steadily building up their gold holdings for strategic reasons.

Looking ahead, investors will be watching two key events this week: the ISM services PMI for June, due Monday, and the minutes from the latest Fed meeting, set for release on Wednesday. Both could offer more clues about where interest rates are headed next.

As for price levels, gold’s rebound from its recent low of $3,942 (~₹1,40,600) to $4,200 (~₹1,48,000) happened very quickly, so a pullback to the $4,080–4,100 range (~₹1,44,000) wouldn’t be surprising before the rally resumes toward $4,350 (~₹1,53,500). Silver could see a similar pause, dipping toward $59 (~₹2,30,000) before pushing higher again toward the $70–71 zone (~₹2,52,000).

Dr.Renisha Chainani, Head- Research, Augmont