Spot gold opened higher on Thursday morning, reclaiming the $4,300 level for the first time since June 18, reaching a seven-week high. The precious metal has gained $250 this week, with intraday gains exceeding 1%.
According to market data, multiple domestic jewelry brands saw a sharp overnight price surge on August 6. Lao Miao Gold reported its 24K gold jewelry at 1,299 yuan per gram, a single-day jump of 63 yuan. Chow Sang Sang listed its 24K gold jewelry at 1,295 yuan per gram, up 58 yuan in one day, while Lao Feng Xiang quoted 1,293 yuan per gram, a daily increase of 56 yuan.
The trigger for the rally came from disappointing U.S. economic data. The July ADP private payrolls report showed an addition of only 44,000 jobs, significantly below the market expectation of 70,000, marking the lowest level this year. Meanwhile, wages for job changers rose 7% year-on-year, the fastest pace in nearly a year, while wages for stayers held steady at 4.4%. The market is now closely watching the U.S. July nonfarm payrolls report due Friday.
As expectations grow for a potential temporary agreement between the U.S. and Iran to reopen the Strait of Hormuz, inflation concerns have eased. This has prompted traders to reduce their bets on further Federal Reserve rate hikes, boosting gold prices. The market currently anticipates only one rate hike from the Fed before year-end, down from expectations of two hikes just last week. Since gold yields no interest, a smaller tightening cycle is favorable for the metal.
Ryan McKay, senior commodity strategist at TD Securities, noted that optimism over a U.S.-Iran deal and waning concerns about broader economic risks have jointly driven precious metals higher. In a report, McKay stated: "The current price levels for gold and silver could also trigger short-covering inflows. The Bank of Korea's resumption of gold purchases is another positive catalyst. Additionally, recent inflows into Asian gold ETFs confirm a shift in sentiment across the region over the past few weeks."
In an analysis on Thursday morning, Shanghai CIFCO Futures highlighted that the Federal Reserve's July meeting kept rates unchanged, but the short-term market focus remains on the Fed's monetary policy. However, as geopolitical risks cool, gold is gradually becoming less sensitive to real interest rates. The firm argued that, from a medium-to-long-term perspective, the fundamental basis for higher precious metals prices remains intact: the global geopolitical risk level is rising, the restructuring of the political and economic order is ongoing, U.S. fiscal pressures are mounting, de-dollarization continues, and global central banks are maintaining their trend of increasing gold reserves, with the People's Bank of China adding to its holdings for 20 consecutive months. Silver, platinum, and palladium, which carry both financial and industrial attributes, broadly follow the trend of the precious metals sector, but their upward momentum depends on the support of industrial demand.
This article is for informational purposes only and does not constitute investment advice. Investing involves risk, and caution should be exercised.
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