【TMGM Financial Recap】Before the CPI data, gold broke through $4,400 and entered consolidation, but the foundation of the long-term bull market remains unchanged!
Gold prices surged and then fell back on Tuesday, having briefly broken through $4,400 and touched a more than two-month high. Market attention has shifted to the upcoming release of U.S. inflation data to assess the Fed's future interest rate path.
The recent rise in gold has been mainly driven by technical buying, with rising market bullish sentiment, coupled with increased inflows into China gold ETFs, prompting investors to reposition themselves in precious metals. However, the market is awaiting the US July Consumer Price Index (CPI). After previously released weak employment data, if inflation continues to cool, it could ease the Fed's concerns about price pressures and reduce expectations for further rate hikes, which would be positive for gold. On the other hand, rising energy prices could re-increase inflation risks. U.S. President Trump's recent strengthening of his stance on Iran has cast a shadow over the prospects for reopening the Strait of Hormuz, and rising oil prices may increase pressure on the Federal Reserve to maintain tightening policies.
Since gold itself does not generate interest, rising interest rates usually diminish its appeal. Currently, there are clear disagreements within the Federal Reserve regarding future policy. On Monday, Cleveland Fed President said that to achieve the 2% inflation target, multiple rate hikes may still be needed in the future.
In recent weeks, gold has regained the key support level of $4,000, driven by continued central bank purchases, a rebound in investor safe-haven demand, and concerns over global fiscal risks. However, despite the recent rebound, gold prices are still about 17% below levels seen before the Iran war broke out at the end of February. Meanwhile, rising oil prices and a stronger dollar have also limited further upside for precious metals.
This year's gold price adjustment is not a trend reversal, but rather a normal correction within a long-term upward cycle. Gold's previous pullback from highs was mainly due to short-term liquidity tightening, a stronger dollar, and investors reducing their positions, but the factors supporting the long-term rise in gold remain unchanged, including global debt growth, widening fiscal deficits, central bank de-dollarization, and geopolitical fragmentation.
As the pressures from high interest rates, tight liquidity, and a strong US dollar are gradually being absorbed by the market, precious metals still hold long-term investment value. Investors need to distinguish between short-term fluctuations and long-term trends. Expanding sovereign debt, persistent fiscal deficits, diversification of central bank reserves, and shifts in the global geopolitical landscape will continue to strengthen gold's strategic asset status.
Market Insight:
Gold continues to rebound at the 4-hour level, with the MACD double line and volume bars converging above the zero axis. Whether gold's recent rally can continue depends on whether it can hold the $4360 to $4370 range. If this level is breached, the market may enter a consolidation phase and be suppressed by rising oil prices, the dollar, and US Treasury yields.
