Gold Hits 10-Week High, Silver Surges Over 11% in a Week; Here’s What Is Driving the Precious Metals Rally

Gold and silver have extended their recent rally, with gold touching a 10-week high and silver gaining more than 11 per cent over the past week. Spot gold touched around USD 4,435 per ounce during the week, its highest level since mid-June, before settling near USD 4,375 at the time of writing. Comex silver surged more than 11 per cent during the week, with spot silver rising to around USD 64 per ounce. In India, gold was trading near Rs 1,55,000 per 10 grams, while MCX silver posted weekly gains of around 6.58 per cent and was trading near Rs 2,31,804 per kilogram.

The rally has been supported by several factors rather than a single trigger. Weaker US employment data, reduced expectations of a Federal Reserve rate hike, continued central Bank gold purchases, renewed ETF inflows and geopolitical uncertainty surrounding the Strait of Hormuz have together strengthened demand for precious metals.

Weak US Jobs Data Cools Rate Hike Expectations

One of the key triggers for the latest rally came from the US jobs market. The US Bureau of Labor Statistics reported on August 7, 2026, that nonfarm payrolls fell by 23,000 in July, compared with market expectations of an increase of around 80,000 jobs. The June reading was also revised lower, while combined revisions to May and June removed approximately 103,000 jobs from earlier estimates.

Following the release, spot gold jumped 2.67 per cent to USD 4,352.60, while silver gained 4.20 per cent to USD 63.97 as traders reduced expectations of a Federal Reserve rate hike in September.

Markets are now pricing around a 44 per cent probability of a 25 basis point rate hike in September, compared with 67 per cent a week earlier. Gold does not pay interest or Dividends, meaning lower interest rate expectations can reduce the opportunity cost of holding the metal and support demand.

Federal Reserve Rate Decision in Focus

The Federal Open Market Committee voted 9-3 on July 29 to maintain its benchmark interest rate in the range of 3.50 per cent to 3.75 per cent. While the Federal Reserve has not signalled a clear policy pivot, the combination of weaker employment data and the decision to hold rates has reduced near-term expectations of a rate hike.

The next major trigger for precious metals is US inflation data due later this week. The softer payrolls report could reduce pressure on the Federal Reserve to raise rates in September, although stronger-than-expected inflation could revive rate hike expectations and put pressure on gold and silver.

Record Central Bank Buying Supports Gold

Beyond the short-term movement in prices, strong central bank demand has provided a more structural support to gold. According to the World Gold Council's Gold Demand Trends Q2 2026 report, central bank net gold purchases reached 289 tonnes during the April-June quarter. This was five times the Q1 2026 level and the highest second-quarter figure on record.

Central bank purchases were also 62 per cent higher than the corresponding period a year earlier. The National Bank of Poland added 51 tonnes during Q2, taking its reserves to 632 tonnes, while the People's Bank of China added 33 tonnes, its largest quarterly addition since Q4 2023.

The latest World Gold Council survey also showed strong expectations for continued central bank demand. Around 89 per cent of respondents expected global gold reserves to increase over the next year, while a record 45 per cent expected to increase their own gold holdings.

ETF Inflows Return

Gold has also received support from renewed ETF buying. Total bullion holdings in exchange-traded funds increased by 24 tonnes since July 20, marking the fastest pace of inflows since early April.

The return of ETF demand comes at a time when central bank buying remains elevated, providing another source of investment demand for the yellow metal. The combination of institutional purchases and renewed ETF inflows has supported prices even as jewellery demand remains under pressure at elevated price levels.

Geopolitical Uncertainty Adds Safe-Haven Support

Geopolitical developments surrounding Iran and the Strait of Hormuz have also added to the safe-haven appeal of precious metals. Uncertainty persisted over efforts to reopen the Strait of Hormuz, a critical shipping route for global oil exports.

Iran indicated that talks with Oman were close to an agreement but denied holding direct negotiations with the US, despite claims from Washington that an agreement was imminent. Continued uncertainty around the situation has added to the broader macroeconomic risk backdrop and supported demand for safe-haven assets such as gold and, to a lesser extent, silver.

Why Silver Is Outperforming Gold

Silver has delivered a sharper weekly gain than gold, with Comex silver rising more than 11 per cent compared with a gain of around 7 per cent for gold. The difference reflects silver's dual role as both a precious metal and an industrial commodity.

Silver is widely used in applications including Solar panels, electric vehicles, Semiconductors and data centre infrastructure. As a result, improving sentiment towards both precious metals and industrial commodities can provide additional support to silver.

The gold-to-silver ratio was also elevated before the recent move, indicating that silver had been relatively weaker compared with gold. As silver began to catch up, the compression in the ratio further amplified its price movement.

What the Rally Means for Indian Investors

For Indian investors, gold has recovered approximately 12 per cent from its recent lows and is trading near Rs 1,55,000 per 10 grams. The recovery has been supported by central bank demand, renewed ETF flows and a softer US dollar, while jewellery demand remained under pressure during Q2 2026 due to elevated prices.

Investors seeking exposure to gold and silver can access exchange-traded products linked to the underlying metals. Gold ETFs provide a market-linked route without the requirement of physical storage, while gold funds of funds offer another route for investors seeking systematic investment options. Sovereign Gold Bonds, where available in the secondary market, provide gold price exposure along with an interest component. For silver, MCX-listed silver ETFs provide a regulated route to participate in the metal's price movement.

However, the rally remains sensitive to macroeconomic developments. Stronger-than-expected US inflation could revive rate hike expectations and strengthen the US dollar, potentially putting pressure on both gold and silver. ETF inflows have also only recently resumed and could reverse if the Federal Reserve adopts a more hawkish stance.

What to Watch Ahead

The latest rally in gold and silver has been supported by a combination of weaker US employment data, reduced rate hike expectations, the Federal Reserve's decision to hold rates, record central bank gold purchases, renewed ETF inflows and geopolitical uncertainty around the Strait of Hormuz.

For gold, sustained central bank demand and ETF flows remain important factors, while silver's performance will also depend on industrial demand. The immediate focus, however, will remain on the upcoming US inflation data, which could influence expectations around the Federal Reserve's next policy decision and determine whether the current momentum in precious metals continues.
Also Read - SME IPO Alert: Sham Foam IPO Opens Today at Rs 130; PAT Jumps 142% YoY in FY26

Share your thoughts on this development in the comments below.
Disclaimer: The article is for informational purposes only and not investment advice.