Spot gold hit an intraday high of $4,697.07 per ounce on the 25th, marking its strongest level since mid-May and putting the $4,700 threshold within striking distance. According to Wind data, bullion has staged a powerful rebound since bottoming out at $3,942.43 per ounce on June 30th, with August accelerating sharply to post a roughly 15% gain so far this month.

Domestic Chinese gold prices have moved in tandem. On the 25th, the Shanghai Gold Exchange's Au99.99 contract opened at 1,004 yuan per gram and touched an intraday peak of 1,012.6 yuan per gram as of press time.

What's Driving the Rally? A Weaker Dollar Serves as the Catalyst

The rapid ascent in gold prices is underpinned by a complex interplay of factors. Li Gang, research director at the China Foreign Exchange Investment Research Institute, told reporters that a softer US dollar is the direct catalyst for gold's breakout. The US Treasury's expanded buyback program for long-dated bonds has fueled concerns about intervention in the bond market, liquidity conditions, and the real value of the dollar, with the greenback's decline lowering the cost of gold purchases for non-US investors.

Li noted that the deeper logic lies in the market beginning to price in US fiscal credit risk. Gold's role is also evolving, no longer confined to a traditional safe-haven asset but gradually becoming a tool to hedge against dollar credit and sovereign debt risks. Meanwhile, gold allocation demand has revived, with global physical gold ETFs recording net inflows of approximately $3 billion in July and holdings rising by about 23 tonnes. Combined with continued central bank buying, this provides long-term support for prices.

Deng Zhijian, senior investment strategist at DBS Bank (China), said the joint US-Japan intervention in the yen exchange rate has shown the market that the retreat of yen-related carry trades could impact US equity and bond markets. Deng pointed out that the Treasury's "issuing short-dated bonds while repurchasing long-dated ones" also confirms that demand for medium- and long-term US Treasuries is weak. With cooling inflation, softening employment, reduced odds of Federal Reserve rate hikes, and a falling dollar index, increasing gold holdings has become a rational choice for investors seeking to hedge risks.

The current rally has also sparked heated discussion among investors, with many sharing their profit and loss positions on social media. Comments range from "I keep watching the charts daily, hoping for this rebound; my account is finally close to breaking even" to "I'm torn now — should I hold and gamble on $5,000, or take profits while I can?" and "Despite the hot market, I don't dare add more positions lightly."

A Beijing investor surnamed Yan told reporters that she currently holds 170 grams of gold investment products with an average cost of approximately 1,113.29 yuan per gram. Based on the investment gold price of around 1,000 yuan per gram on the 25th, she still faces a floating loss of nearly 19,000 yuan. "Gold has finally risen, and my persistence is paying off. I hope it keeps climbing so I can break even sooner," Yan said, adding that she remains bullish on gold in the long term and plans to hold it for the long haul.

Could Gold Challenge $5,000?

Li Gang holds a cautiously optimistic view on the medium-term trajectory, suggesting that a rise to $5,000 may not be a difficult feat. "Based on the current range of $4,680 to $4,700, the $5,000 level still offers 6% to 7% upside. If the dollar remains weak and US long-end rates stay suppressed by fiscal policy, while global central banks and ETF funds continue to flow in, gold breaking above $4,700 and then challenging $5,000 is a realistic possibility — and $5,000 would not be the end of the move," Li said.

Li also highlighted a key observation point: once gold firmly holds above $4,700, the $5,000 level will gradually become the "market trading target." However, he cautioned about a small-probability risk — if the US Treasury intervenes in the bond market, strengthening the dollar and causing a notable rebound in US real interest rates, gold could undergo a technical correction.

Deng Zhijian noted that on a medium-to-long-term basis, the trend of central bank gold purchases and rising investment demand is fairly certain. Combined with short-term factors such as US debt concerns and Japan's rate hike, gold has ample momentum for further upside in the near term. From a technical perspective, $4,670 and $4,850 per ounce represent two key resistance levels.

Deng also cautioned that the profit potential from chasing the market at current levels is limited, and using leverage amplifies investment risk. Investors with higher risk tolerance could consider gold mining stocks, which, even if gold prices pull back, remain at elevated levels compared to the same period last year. With both gold demand and prices rising, the earnings potential of mining companies could improve further. For more conservative investors, allocating to physical gold or gold ETFs that track the metal's price is a suitable option.