【TMGM Financial Recap】After failing to surge to $4,500, gold was pulled back—is it a technical correction or the end of the rally?
Boosted by a moderate rise in the US July Consumer Price Index, gold prices have strengthened for several consecutive days. However, just as the bulls were celebrating, market sentiment sharply declined, and spot gold subsequently fell sharply. $4,500 appears to be a key resistance level for gold, with prices briefly touching this level but then pulling back from it. Repeated attempts at this critical psychological threshold have failed, coupled with gold prices having accumulated significant gains in the short term, and profit-taking selling pressure surging like a tide, pushing gold prices into a phase of repeated volatility.
Looking at a longer cycle, spot gold once surged to a historic peak of $5,596 at the beginning of the year, then entered a continuous correction. On June 30, it even touched $3,943.65 intraday, about 29.53% down from its yearly high. The rally since August is just a sharp rebound in this long correction, while repeated resistance at the $4,500 level clearly outlines the fierce tug-of-war between bulls and bears in this area.
The core driving force behind this gold price rebound comes from the moderate performance of U.S. inflation data and the resulting cooling expectations of Federal Reserve rate hikes. The U.S. July Consumer Price
Index, released on August 12, showed the CPI rose 3.4% year-on-year, lower than June's 3.5%, in line with economists' expectations. Shortly after, on August 13, the U.S. Department of Labor released the July Producer Price Index, which was flat month-on-month, also below the market's expected 0.2% increase. Two consecutive inflation reports both point to gradual easing of price pressures, which has greatly weakened market bets on a Fed rate hike in September. The market's expectation for a rate hike at the September meeting dropped to 34% after the PPI data was released, down from 55% a week ago. More critically, divisions within the Federal Reserve are intensifying, with three unanimous opposing votes appearing in the same policy decision for the first time. This high degree of uncertainty in the policy path is precisely the root cause of the intense volatility in the gold market.
The geopolitical situation in the Strait of Hormuz forms a deeper variable influencing gold price trends. The impact of this geopolitical storm on gold is far more complex than it appears on the surface. Traditional logic holds that geopolitical conflicts benefit gold through risk aversion, but the transmission path of this round of Middle East conflict is more subtle. Currently, the key to curbing inflation lies in resolving the Middle East situation or building oil pipelines to reduce dependence on the Strait of Hormuz, which the Federal Reserve has no influence on.
Despite the sharp short-term volatility, gold's medium- to long-term support logic remains solid. The global central bank gold buying frenzy is far from over. According to data from the World Gold Council, global central banks net purchased 288.9 tons of gold in the second quarter of this year, a quarter-on-quarter increase of 411% and a year-on-year increase of 62%. The Bank of Korea has even resumed gold purchases after 13 years.
Market Insight:
Gold has fluctuated and pulled back at the 4-hour level, with the MACD double line and volume bars expanding below the zero axis. The two narratives that previously suppressed gold are now being disproven: global liquidity has not truly entered a tightening cycle, and de-dollarization is not over. The gold bull market is not over yet; the window for re-allocation after previous adjustments seems to have opened.
