ING: Central Bank Buying and Softer Fed Rate Expectations Continue to Support Gold

Gold's latest rally has been supported by two key factors, according to ING commodities strategists: a more dovish repricing of Federal Reserve policy expectations and continued structural demand from central banks. Together, these factors may help explain the metal's resilience beyond a single data-driven move.

Weak Jobs Data Reshapes Fed Expectations

ING noted that gold rose sharply after Thursday's US employment report came in below market expectations, reducing concerns that the Federal Reserve might need to tighten monetary policy further this year.

According to Trading Economics, the US economy added 57,000 nonfarm jobs in June, below the market consensus of around 110,000. The weaker-than-expected data contributed to lower US Treasury yields and a softer US dollar, which provided support for non-yielding assets such as gold.

The move also followed comments earlier in the week from Kevin Warsh, a former Federal Reserve Governor, who struck a less hawkish tone than some market participants had expected.

ING strategists said market participants are likely to continue monitoring upcoming economic data for further signs of labor market weakness, which could reduce the need for additional monetary tightening.

Central Banks Remained Net Buyers in May

Beyond interest rate expectations, ING highlighted World Gold Council data showing that central banks added approximately 41 tonnes of gold in May.

Poland led purchases with 18 tonnes, bringing its total purchases in 2026 to 64 tonnes year to date. Meanwhile, China extended its buying streak to 20 consecutive months, adding another 10 tonnes during the month.

Elsewhere, Russia reduced its gold reserves by 6 tonnes (bringing total sales this year to 34 tonnes), while Turkey cut holdings by 3 tonnes (with cumulative sales of 81 tonnes so far this year).

Despite these sales, ING said the overall trend continues to indicate supportive central bank demand for gold.

Why It Matters for Traders

For traders in Southeast Asia, the combination of softer Federal Reserve policy expectations and continued demand from central banks may continue to provide support for gold prices, even as purchases by some countries are partially offset by sales elsewhere.

Upcoming US employment and inflation data could play an important role in shaping near-term market expectations. According to ING, additional signs of softer economic data could reinforce the constructive outlook currently reflected in the gold market.

Analysis and commentary were sourced from ING commodities strategists via FXStreet. Central bank data were provided by the World Gold Council, while market data were sourced from Trading Economics. This content is provided for informational purposes only and does not constitute investment advice.1