On August 6th, international gold prices broke through the $4,300 per ounce mark, hitting a high not seen since late June with a single-day gain exceeding 4%. Over the past three trading days, spot gold in London has risen more than 5%, while spot silver has gained nearly 7%. This surge prompted several domestic gold jewelry brands to raise their in-store pure gold prices compared to the previous day. In just a few sessions, gold has staged a powerful rebound, with international prices surging and the A-share gold sector rallying in tandem. The critical question now is whether this sudden upswing is a short-term pulse or the beginning of a new trend.
Looking back at the recent trend, gold prices oscillated in a range of $4,000 to $4,150 per ounce for over a month, a zone repeatedly tested and confirmed as a support level. Consequently, the $4,200 level is widely viewed by the market as a crucial threshold for judging gold's short-term direction and a key battleground between bulls and bears. On August 5th, gold decisively broke this month-long stalemate with a large bullish candlestick, gaining over 4%, signaling a clear directional choice after an extended period of choppy trading.
On the capital front, there is a significant return flow to the gold market. As of August 5th, the Huaan Gold ETF has seen net inflows for 16 consecutive days, attracting over 6 billion yuan in total. On a single day, August 5th, the ETF saw net inflows of 895 million yuan. Simultaneously, the largest overseas SPDR Gold ETF has also experienced substantial inflows, creating a resonance between domestic and international capital. In the futures market, speculative net long positions in COMEX gold have dropped to levels seen around 2024, indicating a significant reduction in long-side congestion and a thorough clearing of positions. If gold resumes its upward trajectory, a short-covering rally could be anticipated.
Qu Rui, Senior Deputy Director of the Research and Development Department at Dongjin Chengxin, pointed out that the primary driver of this rapid gold price increase is the recent reduction in geopolitical risks. A sharp decline in international oil prices has cooled inflation expectations, boosting gold's recovery. Secondly, a moderation in expectations for Fed rate hikes has weakened the US dollar index, providing support for gold. Furthermore, as gold prices stabilize, the pessimistic pricing that prevailed earlier is being corrected, with consecutive net inflows into gold ETFs fueling the rally.
Zhu Shanying, a senior researcher at CITIC Futures, suggested that gold prices may continue to benefit in the short term from cooling energy inflation and retreating Fed rate hike expectations. However, the scope of this recovery hinges on whether the Hormuz agreement can be fully implemented and whether global ETF and retail funds shift to sustained inflows. While institutional demand has recovered somewhat after the price adjustment, global gold ETFs overall still showed net outflows in Q2, and jewelry demand has fallen to pandemic-era lows, indicating that overseas retail capital has not yet fully taken over. Therefore, while domestic capital can provide a temporary floor for gold prices, it is insufficient on its own to confirm a new trend.
With the international gold price breaking through $4,200 per ounce, the period of bottom-range trading may be concluding. Whether this rally is sustainable is now the focus for investors. Qu Rui believes the current rally is still a阶段性反弹 driven by eased US-Iran tensions and cooling rate hike expectations. While there is room for short-term upside, the subsequent trend is highly dependent on changes in geopolitical risks, fundamental data, and policy signals. From a macroeconomic perspective, the Fed's "higher for longer" policy stance has not fundamentally shifted. The market has only delayed the timing of rate hikes, not priced in a full easing cycle, meaning real interest rates will likely remain high and volatile, lacking core support for a sustained gold rally. Key signals that could alter this rebound include US economic data, particularly regarding Middle East geopolitical conflicts. If inflation data like CPI rebounds unexpectedly, it could re-strengthen rate hike expectations, pushing real rates and the dollar higher, directly pressuring gold. Conversely, hawkish signals from Fed officials could also quickly end this rebound. Alternatively, if these factors align favorably, the rally could transition into a sustained upward trend.
Xia Yingying, a senior analyst at Nanhua Futures, told reporters that precious metal prices have already partially priced in hawkish Fed expectations after the deep correction, leaving limited room for further valuation declines. Assuming US-Iran tensions remain manageable and oil price expectations are contained, if US inflation and employment data fall back between July and August, the AI investment boom cools, and long-end US Treasury yields stay high, the Fed might pause rate hikes in the second half of the year. This could pave the way for a corrective rally in gold and silver prices during August and September. Looking ahead, the true cooling of US-Iran tensions remains the primary variable. US employment, CPI, and economic data released in August and September, along with the late-August global central bank symposium, will be key nodes determining the second-half monetary policy outlook and direction for precious metals. Under a baseline scenario, the probability of a Fed rate cut within the year remains low, which could also constrain the upside for precious metals in H2.
The team led by Lu Zhe, Chief Economist at Dongwu Securities, believes that in August, gold prices will operate under the interplay of data verification, policy direction, and geopolitical factors. They expect gold prices to emerge from bottom-range consolidation and see the center of gravity move higher. If US macroeconomic data and policy signals form a resonance, there is potential for a phase of accelerated upward movement.
The team led by Ming Ming, Chief Economist at CITIC Securities, argues that gold remains in a long-term bull market, supported by factors like accelerating US fiscal deficits, unbridgeable geopolitical rifts due to deglobalization, and continued central bank buying. Therefore, the recent price decline was merely a temporary correction within a bull market. The current pullback has approached historical extremes, and the $4,000 per ounce level likely represents the bottom zone. Looking forward, they expect the impact of the Strait of Hormuz situation on gold to shift from suppression to support. Fed monetary policy may turn out to be more optimistic than the market expects, and they predict gold prices will return to an upward channel within the year.
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