Gold posts best week since January as Fed hike bets fade
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- Gold fell as much as 18% from a 10-year high above $5,300/oz reached early in 2026, but last week's rebound left its year-to-date return close to flat while mining stocks posted their hottest five-day run since 2008
- The Federal Reserve's rate hike odds dropped more than 20 percentage points in a week after tame CPI (0.1% monthly, 3.4% annual, core 2.5%) and a soft non-farm payrolls report, with Patrick Kennedy noting September was 'genuinely live for a hike right up until the payrolls miss'
- New Fed Chair Kevin Warsh has 'altered the market landscape' through 'cautious and often ambiguous statements,' per Eugenia Mykuliak, pushing capital from stocks into gold and other metals as the Fed signals higher for longer into a softening labor market
- Central banks kept accumulating gold with the PBOC adding 19.9 tons in July — its largest monthly purchase since October 2023 and 21st straight month of accumulation, according to Kennedy
- Gold miners delivered leveraged gains: the Van Eck Gold Miners ETF (GDX) moved roughly three times gold's weekly move, with AngloGold Ashanti and Newmont trading on single-digit forward P/Es and paying strong dividends
- Geopolitical risk keeps the inflation bid alive, with Kennedy noting 'Brent is near %90 with the Strait of Hormuz still closed and Iran holding conditions on reopening it,' preserving forward inflation risk even as July's CPI print cooled
- Physical demand from China and India, the centers of physical gold buying, remains a structural support, with Asia and European flows described as 'stickier' than the more tactical U.S. buying seen in GLD options activity
Why it matters: Gold's rebound hinges on a narrow window where the hike tail risk has been priced out but no cuts have been signaled, creating a stagflation setup that historically favors the metal. With the Fed parked at 3.50–3.75% and Warsh's ambiguity already driving money from equities into bullion, professional flows into ETFs hit a six-week high — meaning retail investors who sold the first-half 18% drop missed a 2008-style mining-stock rally and the start of what Paulson calls gold's early-stage long-term rally.
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