Gold market sentiment has rapidly warmed. On August 6, spot gold surged sharply in early Asian trade, briefly breaking through the $4,300 per ounce mark, hitting a new high since June 18. As of press time, London spot gold was quoted at $4,267.795 per ounce, up 0.5% on the day. The futures market strengthened in tandem with the spot market, showing a clear linkage effect. As of press time, COMEX gold futures rose 0.53% on the day to $4,328.1 per ounce, with the intraday trading range between $4,304.9 and $4,363.7 per ounce, successfully holding above the key psychological level of $4,300 per ounce, with bullish sentiment markedly elevated.
The sharp rise in international gold prices quickly transmitted to the domestic consumer end, with major gold brand jewelry retail prices being raised simultaneously, showing a significant single-day jump. Among them, Lao Feng Xiang reported 1,293 yuan per gram, a single-day increase of 56 yuan; Lao Miao Gold reported 1,299 yuan per gram, up 63 yuan on the day; Chow Sang Sang reported 1,295 yuan per gram, up 58 yuan on the day; and Chow Tai Fook reported 1,297 yuan per gram, up 57 yuan on the day.
Multiple favorable factors converging
Regarding the reasons for this round of rapid gold price increases, interviewees generally believe it is not driven by a single factor but the result of multiple favorable factors overlapping, including geopolitical situations, the dollar trend, economic data, and technical capital flows. "The core catalyst for this round of rapid gold price increases comes from the marginal easing of the Middle East situation and the removal of the dollar pricing constraint," said Zhang Pengyuan, a researcher at PaiPaiWang Wealth. He noted that positive progress in navigation through the Strait of Hormuz has eased expectations of tight crude oil supply, with falling oil prices reducing energy inflation pressure, weakening market pricing for a Fed rate hike, lowering real yields on U.S. Treasuries, and removing the hard constraint that had previously suppressed gold prices. At the same time, the U.S. July ADP employment data came in well below expectations, with a weakening labor market reducing the probability of a September rate hike and the dollar index falling, directly boosting dollar-denominated gold.
From a technical and capital flow perspective, Zhang Pengyuan pointed out that the previous deep correction in gold prices accumulated a large number of short positions. Breaking above key resistance levels triggered programmed stop-losses and concentrated short covering, with passive buying amplifying short-term gains, forming a classic short squeeze. Additionally, continued global central bank gold purchases provided a structural floor, compressing downside space and further strengthening the momentum of this rebound.
Xia Yingying, head of the precious metals and new energy research group at Nanhua Futures, stated that the rise in precious metals has been accompanied by a slight cooling of expectations for Fed rate hikes. On one hand, news that Iran and Oman are expected to reach an agreement to restart navigation through the Strait of Hormuz has pushed oil prices lower; on the other hand, U.S. JOLTs and ADP data coming in below expectations have further heightened concerns that Friday's U.S. non-farm payrolls report may also disappoint. On the technical front, gold has broken above the upper edge of the triangle consolidation pattern and the 60-day moving average; on the capital flow front, precious metals strengthened during active trading hours in both China and the U.S. on Wednesday, with significant open interest increases in domestic gold futures, driving the market to accelerate its upward move.
Kang Daozhi, chairman of Daozhi Investment, analyzed that this short-term sharp rise in gold prices is the result of multiple bullish factors converging. Weakening U.S. employment data has cooled Fed rate hike expectations, with real U.S. Treasury yields falling, reducing the opportunity cost of holding gold; the approaching U.S.-Iran Strait of Hormuz navigation agreement has driven crude oil prices lower; combined with continued global central bank gold purchases and sustained inflows of Asian funds providing a floor for gold prices, coupled with short covering after oversold conditions, multiple forces have jointly pushed gold prices sharply higher.
Wang Weimang, investment manager at Zhonghui Futures, added that the Gold Volatility Index (GVZ) has fallen sharply from its highs at the beginning of the year, with volatility converging to extremes before breaking upward. This means gold has shed its high-volatility speculative attribute and re-entered the field of vision of trend-following allocation funds. Breakouts in a low-volatility environment often imply stronger trend sustainability.
Limited downside for revisions
Short-term gold prices have seen a clear recovery, but whether this marks a trend turning point for gold and how the future market will operate remain to be seen. In response, Xia Yingying pointed out that after a deep correction, precious metals have partially priced in the Fed's hawkish expectations, and the scope for further downward revision in valuations is expected to be limited. Current market trading of Fed rate hike expectations is already quite crowded—meaning the market has fully priced in one rate hike this year and a high probability of another rate hike next year. Under the scenario of a controllable U.S.-Iran situation and limited upside for oil prices, if U.S. inflation and employment data decline in July and August, the AI investment boom cools, triggering stock market adjustments (Q2 earnings reports), and medium-to-long-term U.S. Treasury yields remain high, the Fed may pause rate hikes in the second half of the year, with precious metals still expected to see a restorative rally in August and September. In the baseline scenario, the probability of a Fed rate cut within the year is still expected to be low, which will also constrain the rebound height of precious metals in the second half of the year. If Warsh advances balance sheet reduction in 2027, rate cuts will be offset by quantitative tightening policy.
At the same time, Xia Yingying warned that whether the U.S.-Iran situation truly cools remains the biggest variable. Additionally, U.S. employment and inflation data released in August and September, as well as the late August central bank annual meeting, will be key nodes determining the direction of monetary policy expectations and precious metals for the second half of the year. In the short term, investors can focus on Friday night's U.S. July non-farm payrolls report, the People's Bank of China's gold purchase data, and weekly U.S. initial jobless claims.
Wang Weimang believes that in the short term, $4,300 per ounce is an important psychological level. After breaking above it in early trade, gains narrowed, showing a tug-of-war between short-term profit-takers and earlier trapped investors, but the effectiveness of the technical breakout has been validated by trading volume. It is expected that the scope for subsequent pullbacks is limited, and gold may continue to march higher after consolidation and stabilization. In the long term, the underlying logic for gold price increases has not been shaken. Nearly 89% of global central banks expect gold reserves to continue rising over the next year, and de-dollarization and the structural central bank gold-buying wave constitute the most solid bottom support for gold prices.
Zhang Pengyuan pointed out that high volatility in gold prices will become the norm going forward. On one hand, the consensus on Middle East navigation does not mean the end of the conflict, with twists and turns in negotiations still possible; internal divisions within the Fed are widening, and if inflation rebounds, rate hike expectations will weigh heavily on gold prices. On the other hand, U.S. debt pressure and central bank gold purchases still constitute underlying positives, providing support for gold prices.
Kang Daozhi also noted that short-term gold prices are expected to oscillate at high levels with increased volatility, with strong resistance in the $4,350-$4,400 per ounce range, and key support at $4,200-$4,240 per ounce. Friday's non-farm data will dominate short-term direction, and the risk of chasing highs is very high. However, from a medium-to-long-term perspective, the logic for gold's rise remains unchanged, with geopolitical risks, weakening dollar credit, and global de-dollarization continuing to support gold price increases, with the overall trend likely to be a grinding upward trajectory. On the investment level, Kang Daozhi emphasized that gold is suitable as a hedging asset in a portfolio, not for short-term leveraged speculation. Ordinary investors should strictly control positions, with gold allocation accounting for 5% to 10% of total assets. At current highs, only light positions should be tested, and investors can wait for a pullback to the $4,200 per ounce level before adding positions in batches, deploying low-risk exposure through tools like gold ETFs (exchange-traded funds) and bank accumulation gold, and resolutely avoiding leveraged amplification.
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