Investors Bet $180 Million on Gold After Weak Jobs Data

Investors placed approximately $180 million in bullish call options on gold ETFs and mining stocks on Friday. This surge in activity followed a rally triggered by a July jobs report showing an unexpected decline of 23,000 nonfarm payrolls, which bolstered the case for dovish monetary policy.

Trading volume for the SPDR Gold Shares (GLD) reached twice its 30-day average, while the GDX miners ETF quadrupled its typical volume. This shift follows a period of decline from January highs that was driven by a strong dollar and firming Treasury yields. Market activity now suggests a potential regime change as the dollar retreated and the 10-year Treasury yield stabilized below multi-year highs.

The recovery was further supported by aggressive buying in Chinese domestic gold ETFs, as the Government of China implemented restrictions on offshore capital movement. These developments occur amid ongoing investor speculation regarding potential interest-rate hikes under Federal Reserve Chair Kevin Warsh.