Spot gold opened nearly $40 higher in Asian trading this morning, trading near $4,082, as easing geopolitical concerns weighed on oil prices, reducing inflationary pressures and the need for interest rate hikes, while a weaker dollar supported the precious metal.
In a recent report, Guosen Securities Co.,Ltd. noted that since late February, international gold prices have experienced a notable correction, falling from above $5,000 per ounce to below $4,000 per ounce. At present, the Federal Reserve has turned broadly hawkish, with markets increasingly pricing in the possibility of a rate hike this year, leading to sustained gold price adjustments.
Shift in the Core Logic for Gold Prices
Guosen Securities Co.,Ltd. also highlighted that the core logic driving gold prices has changed. Market concerns are no longer centered on inflation expectations but rather on the resilience of the U.S. economy. With the dollar index strengthening and U.S. bond yields rising further, the increase in real interest rates continues to pressure gold prices. Consequently, whether the U.S. economy shows signs of marginal weakening has become the key driver for future gold price gains.
U.S. Economic Indicators Show Resilience
Specifically, Guosen Securities Co.,Ltd. pointed out that various U.S. economic indicators currently demonstrate resilience. On one hand, AI technology investment has become a core driver of U.S. GDP and manufacturing growth. U.S. real GDP grew at 2.1% and 1.5% in the first and second quarters of this year, respectively, with non-residential fixed investment contributing 1.4% and 1.2% to those figures. The U.S. ISM manufacturing PMI has remained in expansionary territory for six consecutive months. On the other hand, the U.S. labor market remains broadly stable, with the unemployment rate falling to 4.2% in June. Nonfarm payroll data for March through May consistently exceeded market expectations, and although June's figure came in significantly below expectations, more data is needed to determine whether the labor market is deteriorating.
Gold Prices Are in a Bottoming Range
Based on these data points, Guosen Securities Co.,Ltd. concludes that the current gold price correction has entered a bottoming range. International gold prices near $4,000 per ounce have strong support, and prices are expected to stabilize and even rebound. The market is awaiting further economic indicators for confirmation. Once the trend shifts, gold prices could be poised to restart a long-term bull market.
Separately, according to reporting from Hong Kong's Wande News Service, as of July 31, the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, held 32.38 million ounces (1,007.01 tonnes) of gold. This represents a decrease of 27,521.62 ounces (0.85 tonnes) from the previous trading day, a decline of 0.08%, and a weekly net reduction of 2.28 tonnes, or 0.23%.
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