Gold prices have recently resumed their upward trend. Data from Wind shows that on August 24, the intraday spot gold price (using the London spot gold price as a benchmark) peaked at $4,659.96 per ounce—a rise of nearly 1% for the day and a new high since May. Looking at the broader picture, as of the close on August 21, the London spot gold price had risen 13.89% since the beginning of the month. This stands in contrast to the first half of the year, when the price—after hitting a record high in late January—underwent a sustained correction, recording an overall decline of 7.20%.

International gold futures prices have also risen in tandem; COMEX gold futures hit an intraday high of $4,716.7 per ounce on August 24, breaching the $4,700 mark. As of the close on August 21, they had gained 13.50% since the start of August.

What is driving the rise in gold prices? Liu Siyuan, Chief Analyst at Lingxiu Finance, told the *Securities Daily* that the primary reason for the short-term surge is a market reassessment of US Treasury real interest rates and the credibility of the US dollar. Market expectations of dollar depreciation have triggered a corresponding rise in gold prices.

As noted, gold prices have regained momentum while the US Dollar Index has retreated. The index has been under sustained pressure since late July; between July 27 and August 21, it fell 2.58%, dropping from a high of 101 points to the current level of 99.

“The medium- to long-term floor for gold prices is currently supported by structural factors such as US fiscal credibility and gold purchases by global central banks, while short-term fluctuations remain influenced by factors like real interest rates, the US Dollar Index, and liquidity,” said Qu Rui, Senior Deputy Director of the Research and Development Department at Golden Credit Rating International (Orient-Jincheng), in an interview with the *Securities Daily*.

Liu Siyuan believes that continued gold purchases by global central banks have established physical gold demand as a pillar of support for the market in the medium to long term. Furthermore, until the Federal Reserve completes its interest rate-cutting cycle, declining real interest rates and the reassessment of the US dollar”s credibility will provide additional upward momentum. Regarding the outlook for gold prices in the second half of the year from a capital flow perspective, a recent research report by Caitong Securities suggests that liquidity conditions for gold will see marginal improvement. Factors such as the enduring trend of long-term gold purchases by global central banks, expectations of potentially falling real interest rates driving ETF inflows, and speculative capital covering short positions at low levels are collectively supporting gold prices. Furthermore, the report notes that historical data shows a significant rise in the share of gold reserves whenever the US dollar’s share of global reserves declines; consequently, the trend of central bank gold buying is expected to remain robust, with substantial room for increased purchases by emerging markets.

Looking ahead, analyst Qu Rui outlines three potential scenarios for gold prices. In the baseline scenario—characterized by a slow decline in US inflation and the Federal Reserve maintaining high interest rates—the central price level for gold is expected to gradually rise toward $4,500 per ounce. In an optimistic scenario, should the Federal Reserve initiate a rate-cutting cycle and global central banks accelerate their gold purchases, prices could climb back above $5,000 per ounce. Conversely, in a pessimistic scenario—where escalating geopolitical conflicts drive up oil prices, inflation rebounds, and liquidity tightens—gold prices might undergo a secondary dip to $3,800 per ounce. (Source: Securities Daily)

 

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