Precious metals have staged a strong rebound recently. COMEX gold futures posted a solid performance last week, gaining over 7% in their largest weekly advance since January, and climbing back above the $4,400 per ounce mark.

One of the primary catalysts for this gold price rally was the unexpected weakness in the US July nonfarm payrolls report, which triggered a shift in market expectations for the Federal Reserve's upcoming monetary policy and weighed on the US dollar index. At the same time, escalating geopolitical tensions in the Middle East have fueled increased demand for safe-haven assets. Against this backdrop of fluctuating macroeconomic data, rising central bank gold reserves, and an evolving international monetary landscape, the gold market is being influenced by multiple factors. Investors should closely monitor the Fed's monetary policy direction going forward.

Subpar US Jobs Data Weighs on Rate Hike Expectations

Gold, as a non-yielding asset, is priced based on movements in real interest rates and the US dollar index. In this latest price swing, changes in macroeconomic data have become the market's focal point. Data released by the US Labor Department on August 7 showed that US nonfarm payrolls fell by 23,000 in July, against market expectations for a gain of 80,000. Furthermore, payrolls for May and June were revised sharply lower, with a combined downward revision of 103,000. The volatility in labor market data quickly prompted the market to reassess the Fed's future policy path. According to the CME FedWatch tool, the probability of a 25-basis-point rate hike by the Fed in September dropped to 44% from about 68% following the July jobs report. Against the backdrop of shifting monetary policy expectations and currency market movements, the US dollar index weakened, easing some of the pressure on dollar-denominated gold prices. As market positions were repositioned, gold prices saw a staged rebound.

Geopolitical Uncertainty Remains a Factor

Geopolitical tensions continue to be a key variable influencing precious metal prices. Recently, signs of a potential de-escalation in the Middle East sparked discussions that energy supply risks might be easing, somewhat alleviating market concerns about increased energy-driven inflationary pressures. This cooling of energy inflation expectations reduced the urgency for the Fed to tighten policy, indirectly impacting gold prices. However, there are still differences in the stated progress of negotiations between the US and Iran, leaving the geopolitical landscape uncertain. In this macro environment, gold's attributes as a safe-haven asset and a risk-diversification tool have come to the fore. Global central banks and institutional investors continue to hold gold as a crucial part of their asset portfolios to guard against potential liquidity and tail risks. Geopolitical uncertainty objectively provides support for safe-haven demand in the gold market.

Central Banks Continue to Accumulate Gold

Against the backdrop of geopolitical shifts and the trend toward diversifying international reserve assets, global central banks are persistently focusing on and allocating to gold, a key factor influencing gold's medium-to-long-term price trajectory. Public data shows that the People's Bank of China added to its gold reserves for the 21st consecutive month, increasing holdings by 640,000 ounces in July. Meanwhile, official institutions like the Bank of Korea have also restarted their plans to allocate to physical gold. According to the World Gold Council's "Global Gold Demand Trends Report for Q2 2026," global central banks and other official institutions collectively added 289 tonnes of gold to their reserves in Q2 2026, a 62% year-on-year increase and the highest quarterly purchase volume in nearly four years. This official sector allocation to gold reflects a comprehensive consideration of reserve asset safety, liquidity, and risk diversification, objectively providing medium-to-long-term demand support for the gold market. In the short term, gold prices face technical adjustment pressure. Following last week's significant price volatility, non-commercial net long positions have increased, and technical indicators along with moving average systems have shown some deviation, indicating a market need for position repair and volatility normalization. Market participants should closely watch for potential short-term fluctuations following the release of macroeconomic data and manage their position sizes and capital risk prudently. Over the long term, factors such as global fiscal deficits, geopolitical tensions, and the diversification of reserve assets will continue to have a profound impact on gold's role in asset allocation. As the market deepens its discussion on global economic growth rates and the cyclical shift in monetary policy, changes in interest rate environments and real yield expectations will persistently influence gold price trends. In an environment of heightened uncertainty, derivative markets provide market participants with tools to hedge price risk. Currently, the CME's precious metals derivatives system includes various contract sizes. Beyond the standard COMEX gold futures contract (100 troy ounces), a 1-ounce gold futures contract offers a smaller trading size for the market. In practical risk management, market participants can match contracts based on their physical positions or portfolio sizes. The 1-ounce gold futures contract supports round-the-clock trading, providing a fundamental trading condition for position adjustments and risk management across time zones and during macro events.