Spot gold breaks above $4,100; how do institutions view the future trend?

Source: China Business Journal

Zhi Juan Tan, reporter at Economic Weekly, Beijing

On July 22, spot gold continued the gains from the previous trading day, breaking above the $4,100/ounce level during intraday trading for the first time in a week. With the strong rebound in international gold prices, gold stocks collectively strengthened, with Shanjin International (000975.SZ) and Zhaojin Gold (000506.SZ) both hitting their daily limits, while other stocks such as Chifeng Gold (600988.SH) and Xiaocheng Technology (300139.SZ) also rose in response.

In the previous trading session, spot gold briefly fell below $4,000 before rapidly rallying, surpassing $4,080/ounce.

According to Huang Jiaqi, an analyst at Fubao Information interviewed by the China Business Journal, the gold market is still following the logic chain of "US-Iran relations—oil price fluctuations—inflation outlook—Federal Reserve monetary policy." The current rise in gold prices is mainly due to oil prices pausing under marginally weakened geopolitical disturbances and technical resistance at higher levels, which led the market to lower expectations of a hawkish stance by the Federal Reserve, providing short-term support for gold.

Huang Jiaqi further pointed out that the US-Iran conflict has not significantly eased, and it remains difficult for the Middle East to resume normal oil production and transportation in the short term, so inflationary pressures on gold in the medium term persist. "Until the US and Iran reach a formal agreement, the Strait of Hormuz is fully opened to unrestricted navigation, and oil prices fall back to pre-war levels, sustained increases in gold prices will be quite challenging."

Oriental Jincheng believes that although the drop in June inflation data has alleviated some pressure for an immediate interest rate hike in July, it is not enough to prompt a dovish shift in Federal Reserve policy. The market has merely postponed the timing of interest rate hikes, without shaking the consensus of "higher rates for longer." At the same time, the US-Iran conflict and Hormuz Strait navigation risks have once again become key variables. If the situation continues to escalate and pushes oil prices even higher, it could reverse the previous dampening effect of energy prices on inflation, reigniting inflation expectations and thereby putting pressure on gold prices. In the short term, gold prices are expected to remain weak and volatile.

On July 1, the World Gold Council released its "2026 Global Gold Market Mid-Year Outlook" report, stating that after the volatility since the start of the year, gold will enter a critical phase in the second half, with its performance influenced by geopolitical developments, the interest rate environment, and investor sentiment—multiple uncertain factors. Looking ahead to the second half, the World Gold Council expects gold to continue to serve as a barometer for the global macroeconomy. Unlike assets mainly driven by domestic factors, gold reflects the demand from global consumers, investors, and institutions.

Yuan Shuai, an expert at Economic Media Think Tank and Deputy Director of the Investment Department at the China Urban Development Research Institute, told reporters that gold is likely to remain in a relatively strong pattern in the second half of the year. Although there may be several large, volatile pullbacks in the process, the overall trend is expected to continue moving steadily upward in oscillating fashion.

However, Huang Jiaqi believes that the US-Iran situation will remain a central narrative in the second half of the year, with three main areas of focus: first, the outcome of the US midterm elections—if favorable for Republicans, a tilt toward monetary easing could support gold; second, the implementation of US global tariffs, which could trigger short-term safe-haven demand, drive up imported inflation in the medium term and hinder Fed interest rate cuts, and potentially weaken economic growth in the long run due to elevated prices; third, US Consumer Price Index (CPI) and nonfarm payroll data. If CPI remains high but payrolls perform well, the balance of Fed policy may lean toward rate hikes, thus putting pressure on gold.

Data released by the US Bureau of Labor Statistics on July 14 showed that the June Consumer Price Index (CPI) rose 3.5% year-on-year, lower than the market expectation of 3.8%, and significantly down from the previous 4.2%, but still above the Fed's 2% inflation target.

Overall, Huang Jiaqi said that the outlook for gold in the second half needs continued observation of changes in the international situation. Given that the market has already priced in some Fed rate hikes, there may still be some room for gold prices to rise by year-end, but the increase is likely to be limited.

Editor: Zhu Henan