Gold extended its rally on August 11, hitting its highest since June 5, driven by strong central bank purchases, softer US economic data, and geopolitical tensions, with analysts forecasting further gains.
Gold extended its strong run on August 11, with spot prices briefly touching $4,434.84 an ounce and reaching their highest level since June 5, according to the lead report. Bloomberg said the metal had already surged 7.3% in the previous week, its biggest weekly advance since late January, as traders responded to a break above key technical levels that helped trigger additional buying from quant funds and automated trading systems.
The move has been underpinned by softer US economic data, especially a weak jobs report that showed non-farm payrolls unexpectedly falling and large downward revisions to the prior two months. Because gold does not pay interest, it tends to benefit when markets scale back expectations for further Federal Reserve tightening and the dollar weakens. Investors are now waiting for the next inflation reading, with Reuters polling economists and finding expectations that July consumer price inflation will cool to 3.4%, from 3.5% in June.
Central bank demand has added another layer of support. The World Gold Council said official-sector buying was especially strong in the first half of 2024, with net purchases of 483 tonnes, ahead of the previous record of 460 tonnes in the same period of 2023. It said the National Bank of Poland and the Reserve Bank of India were among the most active buyers, while the People’s Bank of China continued to add to reserves. For full-year 2024, the council said central banks were net buyers for a 15th straight year, purchasing 1,045 tonnes worth about $96 billion.
Investor flows have also begun to turn higher again. Bloomberg reported that holdings in gold-backed exchange-traded funds had risen by 24 tonnes since July 20, the quickest pace of inflows since April, suggesting renewed appetite for strategic exposure to the metal. At the same time, geopolitical tension has kept demand for havens firm, with the lead report citing sharper rhetoric between Donald Trump and Iran over transit through the Strait of Hormuz and the risk that higher oil prices could feed inflation concerns. Even so, some market strategists remain bullish: UBS has said weaker confidence in monetary policy and fading dollar momentum should channel more money into defensive assets, while JPMorgan chief executive Jamie Dimon has suggested gold could top $5,000 an ounce by the fourth quarter of 2026.
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