On Tuesday, August 11, spot gold extended its rally during Asian trading hours, breaking through $4,400 per ounce before continuing to climb. By 10:19 a.m., London gold was quoted at $4,493.70 per ounce, up 1.67%, hitting a fresh high since June 8. Domestically, Shanghai gold futures also strengthened, rising 2% to 963.04 yuan per gram. Last week, spot gold surged 7.44% in a single week, marking the largest weekly gain since January.
Clear driving forces behind the rally: The U.S. July nonfarm payrolls unexpectedly fell by 23,000, with the previous two months revised down by a combined 103,000. Market pricing for a September Federal Reserve rate cut has dropped to around 50%, weighing on the U.S. dollar and Treasury yields while boosting gold's appeal. Global central banks purchased 288.9 metric tons of gold net in the second quarter, up 62% year-over-year, with the People's Bank of China extending its buying streak to 21 consecutive months, providing a solid floor for prices. Additionally, disputes between the U.S. and Iran over reopening the Strait of Hormuz add geopolitical uncertainty, offering a safe-haven premium to gold.
Key Developments
When examining gold's long-term support, the true anchor is not speculative Wall Street capital but official central bank gold purchases. This "gold migration" led by sovereign states is reshaping global reserve structures on an annual basis. According to the latest data from the State Administration of Foreign Exchange, as of the end of July 2026, China's gold reserves stood at 76.08 million troy ounces (approximately 2,366.35 metric tons), an increase of 640,000 ounces from the previous month. This marks the 21st consecutive month of purchases since November 2024, with the buying scale expanding for five straight months.
Notably, the pace has accelerated: around 5 tons in March, over 8 tons in April, about 10 tons in May, approximately 15 tons in June, and nearly 20 tons in July, with the July increment hitting a new high since October 2023. This approach of "showing restraint at highs and increasing buying on dips" reflects a deeper logic of reserve asset rebalancing—not short-term market timing but a long-term national strategy. By the end of 2025, China's gold reserves accounted for only about 8.8% of total official international reserves, while the global average for central bank gold holdings stands at 27%. The gap signifies room for growth, and the direction is clear: the People's Bank of China's gold buying journey is far from over.
China is not alone. The World Gold Council reports that global central banks net purchased 289 metric tons of gold in the second quarter of 2026, a 62% surge year-over-year, with total purchases of 345 metric tons in the first half, exceeding the 10-year average. A more forward-looking signal comes from the 2026 Central Bank Gold Reserves Survey, where 45% of respondent central banks said they plan to increase their gold reserves over the next year. On August 3, the Bank of Korea announced it would resume gold purchases after 13 years, with more emerging market central banks expected to follow. Unlike hedge funds chasing quick profits, central banks allocate gold over multi-year horizons, aiming to diversify foreign exchange reserves and reduce excessive reliance on any single sovereign currency. This means central bank buying has a structural, lasting impact on gold prices, not easily reversed by short-term price fluctuations.
To understand why the People's Bank of China is so committed to increasing gold holdings, consider another strategic reserve build-up. Since the 14th Five-Year Plan, China has systematically advanced underground gas storage and LNG terminal construction. By 2025, the country's comprehensive gas storage capacity reached 63 billion cubic meters, accounting for 14.2% of total natural gas consumption, 1.2 percentage points above the plan. When international natural gas prices plunged sharply after the 2022 geopolitical conflict, some eurozone observers questioned why China was aggressively stockpiling gas at low prices. Now, with the Middle East conflict escalating and global energy crises looming, China's ample gas reserves serve as a critical strategic buffer. As the old saying goes, "Prepare for a rainy day"—the decision to stockpile gas was both timely and economically beneficial. Similarly, China is now applying the same persistent approach to increasing gold reserves.
A growing consensus among investors is that this sustained gold buying is a well-considered long-term national policy, not a temporary response to market fluctuations. As long as the core macro environment remains broadly unchanged—central banks continuing to buy, the Federal Reserve shifting toward monetary easing, and persistent geopolitical risks—the fundamental support for gold will remain intact. Market trends have repeatedly shown that even when gold prices experience temporary corrections, buying funds quickly return, indicating that the long-term upward trend is not broken. Institutions predict that if these core positive factors continue to unfold through the remainder of the year, with no substantial dollar strengthening or unexpected Fed tightening, gold could reach around $4,700 per ounce by year-end. However, it is important to recognize that gold is unlikely to replicate the rapid rally seen in the first half of the year, and there will likely be periods of consolidation and profit-taking along the way.
Latest Spot Gold Technical Analysis
Gold has easily broken through its previous resistance zone on the daily chart, with the K-line continuing to maintain a stable upward trend along short-term moving averages. The daily chart shows potential for a secondary upward move after a pullback and confirmation, with support around $4,370. On the 4-hour chart, gold has seen a secondary rally after a period of high-level consolidation, maintaining a well-defined bullish pattern, with resistance in the $4,470-80 zone. On the hourly chart, the K-line is closely tracking short-term moving averages in a steady upward trend, suggesting the upside potential is likely not exhausted yet, with further short-term adjustments and corrections to watch.
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