Driven by a surprise miss in U.S. nonfarm payroll data and rising expectations for de-escalation in the Middle East, international gold prices surged more than 7% in a single week, with COMEX gold futures reclaiming the $4,400 level. After a hiatus of less than two months, gold has once again become a market focus. On the evening of August 7, COMEX gold futures climbed above the $4,400 per ounce mark, reaching an intraday high of $4,432.3 per ounce, while spot gold hit a high of $4,371 per ounce. As of the close on August 7, spot gold settled at $4,341.91 per ounce, up $264.13 for the week, a gain of 7.44%. COMEX gold futures rose $291.60 for the week, a gain of 7.17%, both marking the largest single-week increase since the week ending January 23.
CITIC Futures believes that gold prices could still benefit in the short term from cooling energy inflation and a pullback in rate hike expectations, but the room for recovery depends on whether the agreement related to the Strait of Hormuz can be truly implemented, and whether global ETF and retail funds shift to sustained inflows. The World Gold Council believes that gold will enter a critical "watershed" in the second half of the year and expects central banks' total annual gold purchases to be lower than last year, making it difficult for gold to replicate its previous sustained upward trend.
Two Catalysts Ignite the Rally
Last week's gold price surge had two main drivers. Last Friday, U.S. July nonfarm payroll data unexpectedly missed expectations. According to the latest data released by the U.S. Bureau of Labor Statistics on the evening of August 7, U.S. nonfarm payrolls decreased by 23,000 in July, compared with market expectations for an increase of 80,000. The U.S. unemployment rate in July edged down to 4.1%, the lowest level since June 2025, below the median market expectation of 4.2%. After the data release, the probability of a September rate hike by the Federal Reserve, as priced in U.S. interest rate futures markets, declined, with expectations for a total rate hike of only 28 basis points by December, down from 32 basis points before the data release.
Recently, rising expectations for a de-escalation of tensions in the Middle East have alleviated upward pressure on global energy prices. According to a report by CCTV News, on August 6, U.S. President Donald Trump stated that an agreement to reopen the Strait of Hormuz "cannot be said to have been formally reached" yet, but the strait is currently "open to some extent." The U.S. is participating in relevant negotiations, with overall progress being good. Following this, UBS released a report stating that gold prices could potentially rise to $5,000 per ounce in the first half of 2027. The firm analyzed that the sharp rebound in gold prices was mainly driven by growing market expectations for the reopening of the Strait of Hormuz. Although the short-term market environment is volatile, multiple long-term positive factors have laid a solid foundation for gold's medium-to-long-term upward logic.
Essence Securities is bullish on gold's short-term staged rebound, analyzing that after the earlier price adjustment, gold's exchange-traded positions have become cleaner. Short-term speculative funds that had previously participated in betting on interest rate expectations have largely been cleared out, the risk of concentrated selling pressure on the board has been fully released, and the upward resistance for long positions has significantly decreased. With the landing of multiple external catalysts, conditions for a gold price recovery rally are in place.
Central Banks Buy More as Prices Rise, Retail Investors Accelerate Exodus
In the long term, the structural forces supporting gold prices still exist. On August 7, data from the People's Bank of China showed that its gold reserves stood at 76.08 million ounces at the end of July, an increase of 640,000 ounces month-on-month. This marks the 21st consecutive month of gold purchases by the Chinese central bank since it restarted buying in November 2024. Recently, the Bank of Korea announced a gold purchase plan, intending to resume its gold reserve allocation and include gold ETFs in its reserve investment scope, marking a restart after 13 years.
From a fund flow perspective, the gold market is seeing a notable return of capital. As of August 9, the total scale of seven domestic gold ETFs tracking SGE Gold 9999 grew by a combined 170 billion yuan in the past week, with net inflows from subscriptions and redemptions exceeding 5.5 billion yuan. Meanwhile, the largest overseas SPDR Gold ETF has also recently seen significant fund inflows. UBS analyzed that factors such as Chinese buying interest, net ETF fund inflows, loosening interest rate environment, and renewed market focus on reserve diversification have also contributed.
On the other hand, the joint measures taken by the U.S. and Japanese governments last week to stabilize the yen may have prevented a sell-off in U.S. Treasuries, also providing support for gold prices. However, in the short term, gold prices remain in a state of repeated game-playing among multiple influencing factors. Looking at the futures market, speculative net long positions in COMEX gold have fallen to levels seen around 2024, with long-side crowding significantly reduced and positions relatively well cleared.
Divergence is also evident on the consumption side. On August 6, the domestic pure gold jewelry prices quoted by several domestic gold and jewelry brands were around 1,300 yuan per gram, up more than 55 yuan per gram from the previous day. However, after gold jewelry returned to 1,300 yuan, the activity level in the recycling market increased significantly. One gold retail insider told reporters that the current gold recycling price is around 926 yuan per gram, a difference of nearly 400 yuan from the retail jewelry price, but the number of consumers cashing out has increased notably in recent days.
Jia Shuchang, Head of Research for the Asia Pacific region at the World Gold Council, analyzed that physical demand for gold, such as jewelry, bars, and coins, determines the long-term trend of gold prices, while tools like ETFs and futures dominate short-term price fluctuations. In the short term, whether the rate cut expectations spurred by the nonfarm data can persist and whether the Middle East situation will face reversals remain the biggest variables hanging over gold prices. "There is still a hawkish constraint within the Fed, meaning that falling oil prices can only ease the pressure for rate hikes, but cannot directly push policy towards a looser stance," CITIC cautioned.
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