International spot gold staged an extremely strong rebound during the US trading session on August 5. Spot gold surged by more than 4% in a single day, with an intraday fluctuation close to 190 US dollars per ounce. It closed at 4246.79 US dollars per ounce and hit an intraday high of 4267.55 US dollars, marking the highest price since mid‑June over the past two months. It also recorded its largest single‑day closing gain since February this year. The main COMEX gold futures contract rallied in tandem, briefly breaking above the key psychological level of 4300 US dollars. The price effectively broke through the 50‑day moving average after weeks of consolidation within the 4000‑4150 US dollar range, delivering clear reversal signals on the technical front. During the Asia‑Pacific trading hours on August 6, gold entered a period of high‑level consolidation. Following the sharp rally, some profit‑taking orders emerged. Prices swung back and forth between 4230 US dollars and 4280 US dollars, reflecting intensified tug‑of‑war between bulls and bears. The market now needs to verify whether gold can firmly hold the ground gained in this round of rebound. Domestic gold prices jumped sharply tracking overseas markets. The AU9999 contract on the Shanghai Gold Exchange opened higher in early trade. Domestic gold ETFs and precious metal‑related sectors strengthened simultaneously, and A‑share listed gold companies generally saw considerable gains, showing strong correlation between domestic and overseas markets.

This sharp rally in gold was driven by the convergence of multiple news catalysts. The primary trigger came from the repricing of Federal Reserve policy expectations triggered by weak US employment data. The US ADP private‑sector employment report released on the evening of August 5 Beijing time came in far below market consensus. Private payrolls increased by only 44,000 in July, well short of the market forecast of 70,000 and representing the lowest employment expansion since January this year. The data clearly pointed to cooling momentum in the US labour market. After the release of the figures, market expectations for a further Fed rate hike in September fell rapidly. Market odds for a September hike once neared 70% and then retreated to roughly 55%. US Treasury yields moved lower alongside: the 10‑year Treasury yield slipped to around 4.61%, while the 2‑year yield fell to 4.20%. The US Dollar Index weakened correspondingly, breaking below the 100 threshold and touching 99.70. The simultaneous decline in the US dollar and Treasury yields created direct valuation support for non‑interest‑bearing gold, forming the core macro backdrop for the latest surge. Market participants nonetheless noted that ADP only reflects private‑sector employment, and wage components still retain resilience. All eyes are now firmly fixed on the US July non‑farm payrolls report due this Friday. Non‑farm payrolls, unemployment rate and average hourly earnings will shape gold, dollar and Treasury market trends for the next one to two weeks. Another soft employment print would reinforce rate‑cut expectations, whereas hot labour‑market data could quickly reverse gold’s rebound.

A second major catalyst stemmed from shifting expectations regarding geopolitical risks in the Middle East. Market sources suggested notable progress in negotiations over shipping through the Strait of Hormuz. The United States, Iran and Oman were discussing a temporary 60‑day shipping agreement subject to extension, aiming to restore normal maritime traffic and ease global crude‑supply concerns. Upon the news, international crude oil prices dropped visibly. Lower oil prices eased fears of imported global inflation, prompting market speculation that reduced inflation pressure would remove the need for the Federal Reserve to maintain an overly hawkish monetary stance, which indirectly benefited gold. It should be highlighted that subsequent statements from Iranian officials tempered optimism about the talks, without confirming a final deal. Geopolitical risks in the Middle East remain volatile, and shifts in sentiment can trigger abrupt swings in gold and crude oil prices. It cannot be assumed that conflict risks have fully abated.

Beyond macro news, futures fund flows amplified the extreme price move. After gold breached key technical resistance levels, a large number of CTA trend funds initiated short‑covering activity. Mass short‑position liquidations created short‑term short‑squeezing dynamics and magnified upward price momentum. In other words, this rally was not entirely driven by fresh long‑position building; a substantial portion stemmed from stop‑losses on existing short positions. Since hitting an all‑time high of 5595 US dollars per ounce in January this year, gold underwent a deep correction, falling to near 3940 US dollars and registering a maximum drawdown close to 30%. Substantial short exposure accumulated during the downturn, making sharp short‑covering rallies highly likely once major technical barriers were broken. Turning to ETF holdings, SPDR Gold ETF positions have stayed largely range‑bound without large‑scale continuous inflows. Large allocation‑oriented institutional investors remain on the sidelines. The current rally is mainly fuelled by short‑term trading capital, and medium‑to‑long‑term institutional money has not flowed back en masse. This implies limited stability for near‑term price action, with sharp pull‑backs possible after steep advances.

From a medium‑and‑long‑term perspective, persistent central‑bank gold buying continues to underpin price floors. Latest statistics from the World Gold Council show that global central‑bank net gold purchases surged 62% year‑on‑year in the second quarter of 2026, hitting a new quarterly high. Nearly 90% of surveyed central banks indicated they intend to expand gold reserves over the coming twelve months. South Korea’s central bank resumed gold purchases after years and included gold ETFs among its foreign‑reserve allocation instruments. China’s central bank has also maintained months of consecutive gold‑reserve increases. Sustained official physical buying provides a hard floor against deep corrections even during price downturns. On the physical‑demand front, dip‑buying from Asian markets emerged during prior price declines. After the sharp recent rally, physical purchasing momentum cooled off. Physical demand serves mainly as downside protection rather than a driver of sharp short‑term rallies.

Institutional outlooks are now sharply divided. Some institutions argue that inflection points in US labour‑market conditions alongside easing Middle‑East tensions are loosening the high‑rate headwinds weighing on gold. They view the area near 4000 US dollars as the bottom of this correction and see potential to retake higher ground, targeting roughly 4400 US dollars. Other institutions remain cautious, pointing out that inflation has not yet fallen to the Federal Reserve’s 2% target and inflation stickiness persists. Fed officials have not fully ruled out further rate hikes. Much of the recent rally has priced in soft employment outcomes already. Should economic data surprise to the upside, gold could give back most of its recent gains. From a technical standpoint, the 4280‑4300 US dollar zone represents strong resistance where heavy historical overhead supply exists. Sustained upside breakthroughs require continued strong news catalysts. Key support lies in the 4180‑4200 US dollar band. A break below this zone would likely end the current rebound and send gold back into range‑bound trading.

Key upcoming events to monitor include: first, the full US non‑farm payroll release this Friday, where payrolls, wages and unemployment rate will sway Fed policy expectations. Second, ongoing developments around the Strait of Hormuz shipping negotiations, distinguishing market rumours from confirmed outcomes. Further ahead, US CPI and PCE inflation prints plus public speeches by multiple Federal Reserve officials will be closely watched. A renewed inflation rebound and higher Treasury yields could trigger another round of gold drawdowns. The strong rebound does not automatically signal the start of a major new bull market. Volatility will remain elevated, and risk factors deserve full attention.

The above information is for reference only and does not constitute investment advice. Markets carry risks, and trading requires caution.