【TMGM Financial Recap】 Gold prices continue to rise, hitting an eight-week high. Amid inflation fog and Middle East storms, bulls are betting on the 4500 level!
Gold continued to rise, breaking above the $4,400 per ounce mark. This rally broke through the seven-week high, and market sentiment has clearly shifted to cautiously optimistic. The intertwining of bullish momentum and fear of missing out is driving continued capital inflows, while key U.S. inflation data to be released this week, along with the latest geopolitical developments in the Middle East, are becoming the core variables influencing gold prices in the short term.
The current rise in gold is not an isolated event. Official data last week showed that the People's Bank of China significantly increased its gold purchases in July, with gold in foreign exchange reserves rising to the highest level since October 2023. This move sends a clear signal: amid heightened global uncertainty, officials are still actively allocating gold as a strategic reserve. Gold's overall technical momentum is quite strong. Investors are both focused on the support from China's continued buying and worried about missing the chance for gold prices to climb back above the $4,500 mark. This cautious and unwilling mindset makes buying near key resistance levels especially resolute.
Data shows that in the second quarter of this year, global central banks' net gold purchases reached 289 tons, a year-on-year increase of 62%, setting a new historical high for the same period. According to the World Gold Council's survey, 45% of surveyed central banks plan to continue increasing their gold reserves over the next 12 months, and 89% expect global official gold reserves to rise further.
From a broader perspective, gold, as a traditional safe-haven and inflation hedge, is gaining support under multiple logics. The weakening labor market data has already softened expectations for
aggressive short-term rate hikes by the Federal Reserve. The Chicago Mercantile Exchange's FedWatch tool shows investors priced the probability of a rate hike in September at around 50%, while the chance of a rate hike in December remains as high as 81%. This swing in expectations has created a relatively favorable interest rate environment for gold. If this week's inflation data further confirms that price pressures are under control, the upside for the dollar and real interest rates may be limited, indirectly benefiting gold.
This week, market focus was heavily focused on the US July Consumer Price Index and Producer Price Index. Investors generally expect these data to provide key clues for determining the Fed's future policy path. The market expects July CPI to shift from a 0.4% decline in June to a 0.1% increase, with the year-on-year increase projected to drop from 3.5% to 3.4%; Core CPI is expected to rise 0.1% month-on-month and 2.5% year-on-year.
Weak data will reinforce the rationale for keeping rates unchanged, and in the short term, gold prices will find support above the $4,300 level. If inflation data continues to weaken, the probability of a Fed rate hike in September will further decrease, and both the US dollar index and US Treasury yields are
likely to keep falling, opening up greater upside for gold. Conversely, if inflation data is unexpectedly strong, rate hike expectations may resurface, putting pressure on gold prices in the short term.
Market Insight:
Gold continues to rise on the 4-hour level, with the MACD double line and volume bars expanding above the zero axis. Geopolitical uncertainty itself also stimulates safe-haven funds to flow into gold. Houthi attacks on Saudi refineries, U.S. strategic oil reserve stocks dropping to forty years low, and supply disruptions in the Black Sea region have all heightened tensions in energy markets, further amplifying gold's appeal as a hedge against uncertainty.
