Global gold prices staged a rebound in August, rapidly breaking through the $4,200 and $4,300 per ounce thresholds. By August 11, spot gold (London Gold) briefly surpassed the $4,400 per ounce mark, touching $4,434.95 per ounce. Although the closing price that day pulled back, it still represented a roughly 8% increase from the end of July. This rally has spurred sustained capital inflows into domestic gold-themed ETFs. According to iFinD data, the total scale of 14 gold ETFs reached 274.062 billion yuan as of August 11, with all funds seeing scale growth over the past week, totaling an increase of 27.601 billion yuan. Among them, 11 gold ETFs experienced scale expansion due to net subscription inflows, with the Hua'an Gold ETF attracting 5.013 billion yuan, reclaiming its trillion-yuan scale.
Multiple Factors Driving Gold Higher
Looking at the global gold price trajectory, it hit a peak of $5,596.33 per ounce in January this year, then entered a phase of sustained correction and consolidation. On June 30, it touched a low of $3,943.65 per ounce intraday, a retracement of about 29.53% from the year's high. Entering the second half of the year, gold prices began an upward trend in early July, with closing prices breaking through the $4,100 per ounce mark, followed by further choppy consolidation.
What is driving this rebound? "The most critical factor is the US-Iran negotiations, which briefly signaled a potential détente, raising expectations for the reopening of the Strait of Hormuz and thus pushing oil prices lower," said Zhu Zhigang, Supervisory Board Member and Chief Analyst of the Guangdong Gold Association. On this basis, the unexpectedly weak US July non-farm payroll data has diminished market expectations of a Fed rate hike, combined with recent buying power, leading to the significant price increase. The World Gold Council reported that global investors began adding gold ETFs back to their portfolios in July, with $3 billion in inflows into gold-linked ETFs globally. Domestic gold ETF subscription and redemption activity confirms this trend. For instance, the Hua'an Gold ETF's outstanding shares and scale were 10.297 billion shares and 86.208 billion yuan respectively on June 30, increasing to 10.924 billion shares and 92.025 billion yuan by July 31, a monthly increase of 627 million shares.
Beyond ETF inflows, central banks continue to purchase gold. The World Gold Council reported that global central banks netted 288.9 tonnes of gold in the second quarter, a 411% increase quarter-over-quarter and a 62% increase year-over-year. Data from the State Administration of Foreign Exchange shows that China's gold reserves stood at 76.08 million ounces at the end of July 2026, an increase of 640,000 ounces from June. This marks the 21st consecutive month of gold purchases by the People's Bank of China.
Pan Helin, a member of the Ministry of Industry and Information Technology's Information and Communication Economy Expert Committee, believes a key driver of recent gold price fluctuations is the periodic weakening of the US dollar. "The Japanese Ministry of Finance and the US Treasury recently intervened jointly in the yen/dollar exchange rate because the yen had depreciated too sharply, with the dollar approaching the critical 160 yen level. Once that level is breached and forms a trend, it becomes extremely difficult to reverse. The method to save the yen is simple: the Bank of Japan sells dollars and buys yen," Pan explained.
"The probability of a Fed rate hike in September has dropped significantly. For the Fed, the ideal time to hike is when the economy is strong, employment is good, and inflation is high," Pan emphasized. He stressed that the fundamental reason for the declining probability of a rate hike is that the US economy is beginning to show signs of weakness. The current coexistence of a sluggish US economy and high inflation means the Fed's window for raising rates is closing, providing support for higher gold prices.
Consolidation Pattern Likely to Persist
The warming of global gold prices has directly transmitted to the A-share market. iFinD data shows that as of August 11, the 10 stocks in the A-share gold sector have risen 10.78% and 21.75% over the past week and month, respectively. For example, Chifeng Jilong Gold Mining Co., Ltd. shares hit a high of 51.5 yuan intraday in January, fell to 25 yuan on June 26, and have recently rebounded to around 40 yuan. However, as global gold prices hit a high and then oscillated on August 11, gold sector stocks saw broad declines, with Chifeng Jilong Gold Mining Co., Ltd. falling the most, down 7.84%, even as capital continued to flow in. iFinD data shows that on August 11, the total turnover of A-share gold concept stocks reached 117.114 billion yuan, with large order inflows of 36.872 billion yuan. Among the 14 gold ETFs, 13 saw net capital inflows, with three ETFs, including the E Fund Gold ETF, seeing net inflows exceeding 100 million yuan.
It was noted that in the first half of this year, several investment banks, including JPMorgan and Citigroup, lowered their gold price targets. At the end of June, Goldman Sachs' Global Head of Commodities Research, Dutt, expressed a bullish view on gold prices for the second half of the year in a research report, arguing that structural and cyclical factors provide ample upside, forecasting a year-end gold price of $4,900 per ounce.
Looking ahead, can the gold price rally sustain given the confluence of positive factors? Zhu Zhigang views the current rebound as a "periodic catch-up rally." He suggests closely monitoring the key resistance level of $4,500 per ounce. If this level is effectively broken, the momentum for gold to regain its upward trend will increase. However, if gold prices are rejected around $4,500 and fall, the market is more likely to enter a consolidation range between $4,000 and $4,300 per ounce. Zhu further pointed out that the possibility of a future pullback still exists. The current rally has accumulated significant gains in a short period, and the selling pressure from such short-term profits cannot be ignored. The emergence of selling pressure could push gold prices into a pattern of repeated oscillations and further bottoming. Additionally, the on-again, off-again negotiations between Iran and the US remain a major uncertainty.
"Gold experienced a significant sell-off before, so this rebound is not surprising, but a reversal requires a condition: whether the sentiment for gold investment is fully in place," Pan Helin said. He noted that the strength of the US dollar determines the direction of gold prices, while sentiment determines the speed of their rise or fall. If the dollar continues to weaken, gold prices do have a supportive factor. However, the "feverish" sentiment for gold investment seen earlier this year is unlikely to reappear, as better-returning tech stock investment opportunities are drawing away gold speculators.
Comments