International gold prices saw a significant rebound on Thursday, rising more than 1%, after falling to a one-week low in the previous session, which attracted bargain hunting. Spot gold touched a high of $4,136.24 per ounce during the session and ultimately closed up over 1.3%. Other precious metals also strengthened in sync. Spot silver rose 2.3% to $60.00 per ounce, while platinum and palladium gained 3% and 3.3% respectively, quoted at $1,625.83 and $1,254.28 per ounce.
Although geopolitical tensions provided some safe-haven support for gold, Federal Reserve monetary policy expectations remain the primary factor limiting the upside space for gold prices. Market views indicate that in the short term, the core driver of gold trends lies in the Fed's interest rate stance. If the Fed releases dovish signals, precious metals are expected to continue rising; conversely, if hike signals are clear, gold prices will face pressure. On Thursday, a slight softening of the US dollar and a decline in US Treasury yields provided some recovery momentum for gold prices after three consecutive days of decline, but the dollar overall remained strong, weakening gold's appeal to overseas buyers.
The escalation of the Middle East situation is one of the market's focal points. After Iranian armed forces launched attacks on US military infrastructure in neighboring Gulf countries, the geopolitical risk premium heated up again. The US President previously stated on social media that this was retaliation for prior events and warned that the situation would worsen if it happened again. Iran reiterated that it would threaten to close the Strait of Hormuz if subjected to new attacks, reigniting market concerns about disruptions to global oil transportation. Typically, geopolitical risks boost gold safe-haven demand, but the impact of this round of conflict is more complex. War pushing up energy prices may exacerbate inflationary pressure, thereby strengthening expectations for central banks to maintain high rates or even hike further. In a high-interest-rate environment that generates no interest, gold's advantage as an inflation hedge is often suppressed.
Regarding monetary policy, the market currently expects the probability of a Fed rate hike in September to be about 63% to 64%. Fed meeting minutes show policymakers are growing concerned about inflation, with some officials believing there are reasons for hiking rates. The New York Fed President stated that inflation remains too high, and the Fed is actively discussing various scenarios, committed to bringing the inflation rate back to target levels. A major bank lowered its gold price forecasts for the next two years in its latest report, cutting the average price forecasts for 2026 and 2027 to $4,560 and $4,925 respectively.
Investors will next focus on US inflation data released next week and the Fed Chair's testimony to Congress to find new clues on the direction of monetary policy. If inflation data shows price pressures continue to heat up, market bets on rate hikes may rise, and the space for gold rebounds will continue to be limited; conversely, if inflation cools, gold may regain upward momentum. From a technical perspective, gold remains weak in the short term, currently located below the 20-day Bollinger Band middle track at $4,135, and sellers have not completely lost control. The 14-day Relative Strength Index is below the 50 neutral line, suggesting limited upward momentum. Initial resistance above is located near $4,135; if effectively broken, it will look towards the $4,200 integer level. The $4,000 psychological level below is the recent key support; if lost, it may further test the $3,944 region.
