International gold prices have recently been consolidating near the $4,400 mark, following a successful upward breakout driven by the support level established below $4,000. The current macroeconomic environment is increasingly favoring precious metals. Cooling expectations for Federal Reserve monetary tightening, a retreat in the U.S. dollar index, renewed net inflows into exchange-traded funds, and sustained purchases by central banks worldwide have collectively formed the underlying support for gold prices.
Recently released U.S. data on employment, inflation, and consumption have generally shown signs of cooling. Notably, retail sales fell 0.6% month-on-month in July, marking the first negative growth in nine months and significantly reinforcing market consensus on slowing economic momentum. Mainstream Wall Street economists widely believe that the probability of the Fed raising interest rates again in September has dropped substantially, leaving less room for further policy tightening. For non-yielding gold, the fading expectations of rate hikes directly lower holding costs and significantly enhance its relative allocation value. Coupled with the retreat of the U.S. dollar index from its previous highs, the traditional trading logic that a weak dollar is bullish for gold has been further validated.
Although long-term U.S. Treasury yields remain near multi-year highs, they have not exerted substantial downward pressure on gold prices. Analytical institutions point out that the current elevated long-end yields largely reflect the market's pricing of U.S. fiscal risks and rising term premiums, rather than strong economic fundamentals or further monetary tightening. As the U.S. fiscal deficit widens and debt scales up, relevant budget agencies project that the federal government's net interest expenditure will surpass the $1 trillion mark by 2026. Coupled with large-scale bond issuance by major tech companies amid the AI boom, the supply of long-term funds in the capital market is under pressure, driving up the risk premium demanded by investors. This yield surge, driven by fiscal anxiety and supply pressure, has weakened the traditional negative correlation with gold and may even translate into potential support for safe-haven assets.
Alongside the reshaping of macroeconomic logic, investment demand in the gold market is also experiencing a substantive recovery. In July, global gold ETF holdings increased by approximately 23 tons, absorbing around $3 billion in funds and successfully reversing the net outflow trend of the previous two consecutive months. Meanwhile, speculative net long positions in the futures market have climbed to their highest level since January this year, with hedge funds' net long positions hitting an 11-month high, indicating an accelerated return of trend-following and speculative capital. Furthermore, global central banks are estimated to have purchased 289 tons of gold in the second quarter. This strong structural allocation demand from the official sector is profoundly changing the traditional pricing model that previously relied solely on interest rates and the U.S. dollar.
From a technical perspective, the area around $4,500 and the 200-day moving average constitute the next major resistance for gold prices. An effective breakout above this zone could trigger more momentum capital and ETF buying, establishing a new round of upward trend; conversely, if the price falls below $4,200 again, it would indicate that the market remains in a broad consolidation pattern. The core risk facing the current market is that if subsequent inflation or employment data unexpectedly rebounds, it could reignite rate hike expectations, thereby driving real yields and the U.S. dollar higher in tandem, which would pose the most severe macroeconomic headwind for precious metals.
