【TMGM Financial Recap】Terrifying data weighs on the US dollar, gold prices target $4500, focus on Fed meeting minutes this week!
Gold has shown the resilience of bullish forces with a weekly bullish candlestick. This is the result of cooling U.S. economic data, expectations of Fed policy rate cuts, and intensifying geopolitical tensions in the Middle East. Currently, market bullish sentiment is clearly heating up, but the outlook remains highly dependent on changes in Fed rate hike expectations, so the Fed meeting minutes need to be closely watched this week. The unexpected decline in non-farm payrolls in July has sounded the alarm bell. The subsequent July CPI data rose only slightly by 0.1% month-on-month, slowing year-on-year from 3.5% in June to 3.4%, fully in line with market expectations; The PPI was flat month-on-month, with year-on-year growth plunging from 5.5% in June to 4.7%. The continued cooling of inflation has led the market to quickly lower its bets on rate hikes. The probability of a Fed rate hike in September has plummeted from 55% a week ago to about 33%, meaning the market believes the probability of keeping rates unchanged in September has reached 67.5%.
What truly made dollar bulls unarmed was the terrifying data released last Friday. U.S. retail sales in July fell 0.6% month-on-month, marking the first decline in nine months and the largest drop in 14 months, compared to economists' previous expectations of a modest 0.1% increase. This evidence clearly indicates that the U.S. economy is slowing down. The decline in the US dollar index directly provides external market support for dollar-denominated gold, leaving further room for gold prices to rise.
The unexpected drop in nonfarm payrolls, consecutive cooling CPI and PPI, and unexpected declines in retail sales have completely shattered market expectations for Fed rate hikes, erasing all the hawkish premiums Walsh has accumulated since he became Fed chair.
This week, market attention will shift to the July FOMC monetary policy meeting minutes to be released on Wednesday. Investors will carefully scrutinize any clues about future policy directions, especially since three dissenting individuals appeared at previous meetings, making this transcript more compelling than ever. If the minutes show more officials are cautious about rate hikes, gold will gain further upward momentum.
The flames of war burning over the Strait of Hormuz are not simply a safe haven for gold. As the standoff between Iran and the United States intensifies, international oil prices have rebounded once again. The core contradiction of market trading has shifted. When oil prices surged more than 5% in just one week and approached the $90 mark, investors quickly shifted their focus from the geopolitical conflict itself to its macro consequences. Gold, as an interest-free asset, is extremely sensitive to changes in real interest rates. The surge in oil prices has driven up inflation expectations. Although this may push down real interest rates in the short term, the market will soon expect the Fed to respond with more aggressive rate hikes, causing real rates to rise rather than fall.
Beyond the dual narratives of macro and geopolitics, there is another structural force that cannot be ignored: the continued gold purchases by global central banks. As of the end of July 2026, China's gold reserves reached 76.08 million ounces, an increase of 640,000 ounces compared to the end of June. This marks the 21st consecutive month that the People's Bank of China has increased its gold reserves, with the scale of the increase further expanding from last month's 480,000 ounces.
Market Insight:
Gold rebounded with a 4-hour level of volatility, with the MACD double line and volume bars shrinking near the zero axis. The minutes of the July Federal Reserve meeting, to be released this Wednesday, are the top priority. The market will closely watch the distribution of positions behind the wording in the minutes. If the minutes show more officials leaning toward keeping rates unchanged, further decline in rate hike expectations would open upside for gold.
