Gold prices break above USD 4,400—can the precious metals rally accelerate?
Multiple Signal Convergence: Recent Gold Market Trends and Allocation Drivers
Weakening Marginal Macro Constraints: Short-Term Decoupling Between Gold Prices and Interest Rates
After a deep correction lasting nearly six months, international gold prices have staged a strong rebound, with London spot gold surpassing $4,300 per ounce on August 7 [6]. Gold had previously been pressured by rising real interest rates, a stronger US dollar, and a hawkish shift in Federal Reserve policy expectations. Higher real interest rates increase the opportunity cost of holding non-yielding assets like gold, which has been a key factor weighing on gold prices recently [4].
According to a research report from Huatai Securities, since July, even as US Treasury yields reached new cyclical highs, gold prices did not decline further, indicating a weakening of the short-term correlation between interest rates and gold prices.
Against this backdrop, gold prices have not continued to fall. In addition to technical factors, sustained gold purchases by central banks globally may have provided another layer of significant support.
Ongoing strategic gold buying by central banks has strongly underpinned the long-term floor for gold prices.
Compared with demand from ETFs, futures, or jewelry, central bank gold allocations typically follow much longer decision-making cycles. Central banks increase their gold holdings primarily to diversify reserves, reduce counterparty risk, and hedge against geopolitical fragmentation, sanctions, and overreliance on specific currencies [4].
In Q1 2026, global central banks net purchased approximately 244 tonnes of gold, marking the fourth-highest annualized demand level since 1950. According to the 'Q2 2026 Global Gold Demand Trends Report,' central bank net gold purchases rebounded significantly in Q2 after slowing in Q1, with buying activity widely distributed and not limited to a few large reserve-holding countries [1].
As of the end of June, the People's Bank of China had raised its gold reserves for the 21st consecutive month. Following a 7-tonne increase in Q1, it added a further 33 tonnes in Q2—the largest quarterly purchase since Q4 2023. By the end of July, its reserves rose further to 76.08 million ounces, up from 75.44 million ounces at the end of June [2]. This trend appears to reflect a growing emphasis by official reserve managers on long-term risk resilience.
The Bank of Korea has announced it will restart its gold purchasing program after a 13-year hiatus [5].
Gold ETFs maintain a solid funding base, with only temporary and short-term outflows observed.
In Q2 2026, global physical gold ETF demand turned negative, primarily due to rising real interest rates, a stronger US dollar, and tighter monetary policy expectations. However, the outflows in Q2 have not fully offset the inflows accumulated in Q1. According to World Gold Council data, global gold ETFs still recorded a modest net inflow in H1 2026, with total holdings increasing by 18 tonnes. Asia led inflows (70 tonnes), Europe also contributed positively (8 tonnes), while North America was the only region to see net outflows (-61 tonnes) in the first half [1]. China’s H1 net inflows remained the third-highest on record for any half-year period. Whether ETF fund flows improve further will depend on real interest rates, the US dollar, gold price trends, and relative equity market performance.
Technical pattern has completed a solid base formation, with strengthening signals breaking out of the weak trading range
In late June, CME noted that gold futures were testing a key support level near $4,000. Subsequently, London spot gold formed a W-shaped double bottom around $3,950 in late June and mid-July; it broke above the downtrend line on July 22 and retested it, then firmly held above it again on July 29; on August 5, it rose more than 4% in a single day. Huatai Securities interpreted this move as confirmation of a breakout from a descending wedge [5].
Based on the above pattern, it can be preliminarily concluded that gold prices have 'essentially exited the weak trading range.' This conclusion is based on technical analysis and requires further observation of the sustainability of the breakout.
AI-related tech stocks experience volatility; gold attracts attention amid sector rotation
In Q2, the strength of domestic tech stocks diverted some capital away from China-listed gold ETFs. Recently, as volatility in tech stocks has increased, investors’ willingness to seek opportunities beyond the AI theme has grown, potentially benefiting gold through cross-asset capital rotation.
Meanwhile, COMEX non-commercial net long positions have declined to levels seen in 2024, gold’s volatility remains low, and its technical setup has improved. If equity market outlook weakens, gold’s appeal as a diversification asset could increase [5].
Summary: Multiple tailwinds converge, opening up medium-term upside potential for gold
Overall, central bank gold buying provides sustained demand support, while technical patterns and cross-asset capital rotation are showing favorable shifts. Although incremental ETF inflows have not yet fully returned, the net inflow trend observed in the first half of the year has not been completely reversed.
Accordingly, a relatively prudent assessment currently is: gold has essentially exited its weak trading range and may have significant medium-term upside potential. If inflationary pressures do not trigger broad-based second-round effects, the Fed’s tone could turn more dovish, and a decline in real rates may serve as a key catalyst for gold price recovery [4].
The World Gold Council also notes that Western ETF flows are highly sensitive to movements in real interest rates and the U.S. dollar. Although gold prices may face short-term headwinds from the dollar and interest rates, structural long-term support remains robust, supporting an optimistic medium-term upward trend [1].
A Convenient Gold Allocation Tool — China AMC Digital Gold ETF:
The China AMC Digital Gold ETF (3418.HK / 83418.HK / 9418.HK) will officially list on May 29, 2026.
1. Gold bars held in secure vaults in Hong Kong, fully insured throughout
• Gold stored in LBMA-accredited professional vaults (Malca-Amit and HKIA)
• Standard Chartered Bank acts as the gold custodian
• Fully insured throughout the entire process, covering risks such as theft and transportation*
2. World’s first multi-currency trading counters (HKD, RMB, USD) combined with tokenization innovation
• Post-listing, trading counters will be available in HKD, RMB, and USD
• Full on-chain recording of issuance, settlement, and holdings for transparency and verifiability
Investments involve risks, including the loss of principal. Past performance of the fund does not indicate future returns. Investors should read the fund’s prospectus and relevant product key facts documents prior to investing in the China AMC Digital Gold ETF (the “Fund”) to understand the details and risk factors associated with the Fund. You should not make any investment decision based solely on this information. Investors should note:
• The Fund seeks to provide investment results that, before fees and expenses, closely correspond to the performance of the LBMA Gold Price AM (the “Benchmark”).
• The Fund will primarily invest in gold bars. The Fund is exposed to investment risk, gold market and concentration risk, risks relating to the LBMA Gold Price AM, gold custody and safekeeping risks (including custodial risk, unallocated account risk, and insurance risk), reliance on gold dealers, and termination risk.
• The Fund employs a passive management approach and is therefore subject to passive investment risk and tracking error risk.
• Although the Fund’s base currency is USD, listed share classes may also be traded in HKD and RMB, and unlisted share classes may be denominated in currencies other than the Fund’s base currency. Consequently, the Fund is exposed to foreign exchange risk and, where applicable, RMB currency and conversion risk.
• The custodian, sub-custodian, gold custodian, and gold dealer (which also acts as tokenization agent) are all subsidiaries of Standard Chartered Group Limited. Therefore, the Fund is exposed to the risk of reliance on entities within the same group.
• Listed and unlisted share classes are subject to different pricing and trading arrangements. Due to differences in fees and expenses, the net asset value per share may vary across classes. Investors in unlisted share classes may be at an advantage or disadvantage compared to investors in listed share classes.
• The tokenized unlisted share class of the Fund is exposed to blockchain technology risk, digital asset security risk, cybersecurity risk, latency risk, regulatory risk, potential challenges in applying existing laws, operational and technological risks, and risks associated with virtual asset trading platforms.
• The listed share classes of the Fund are exposed to multi-counter trading risk, risks arising from differing trading and operating hours between the Hong Kong Stock Exchange and the London Bullion Market, and reliance on market makers.
* Custody Risk: Gold bars deposited into the Sub-Fund are held in designated vaults maintained by a gold custodian at vault providers, primarily on an “allocated” basis (i.e., gold bars owned by the Sub-Fund are segregated from other parties’ precious metals and physical gold). Allocations of gold bars are made only in whole bars. However, access to the Sub-Fund’s gold bars may be restricted due to external events such as floods, terrorist attacks, and other unforeseen circumstances beyond the control of the fund manager and custodian.
Source:
1. Gold Demand Trends: Q2 2026, World Gold Council, July 30, 2026, website: https://china.gold.org/goldhub/research/gold-demand-trends/gold-demand-trends-q2-2026
2. PBOC Increases Gold Reserves, Wall Street CN, August 7, 2026, https://wallstreetcn.com/livenews/3146556
3. “China Gold Market Review and Outlook for Q2 and H1 2026,” World Gold Council, July 30, 2026, website: https://china.gold.org/goldhub/research/gold-demand-trends/gold-demand-trends-china-focus-q2-2026
4. Gold: Between inflation fears and diversification of reserves, UBS, June 5, 2026, website: https://www.ubs.com/global/en/wealthmanagement/insights/marketnews/article.3447284.html
5. “Gold After Building Momentum for a Breakout,” Huatai Securities Fixed Income Research, August 6, 2026, website: https://wallstreetcn.com/articles/3778900
6. Fresh from the Trading Room: Copper’s Crossroads, CME Group, June 30, 2026, website: https://www.cmegroup.com/newsletters/fresh-from-the-trading-room/2026-06-30.html#events
Unless otherwise stated, data sources are China AMC (HK) and Bloomberg, as of August 7, 2026.
Risk Warning: Gold prices are influenced by multiple factors including international geopolitical developments, monetary policy, and market sentiment. Past performance does not indicate future results. The content of this article is for reference only and does not constitute investment advice. Investors should make prudent investment decisions based on their own risk tolerance.
Investments involve risks, including the loss of principal. The price of fund units may go up or down, and past performance of a fund does not indicate future returns. Tokenization exposes the fund to risks related to blockchain technology, digital asset security, cybersecurity, operational delays, and virtual asset trading platforms. You should read the fund offering documents and the Key Facts Statement for details. Investors should not make investment decisions based solely on this marketing material. Any forecasts, outlooks, or opinions contained herein are for your reference only and are not guaranteed to materialize. The information in this document reflects market conditions and our views as of the publication date and is subject to change without notice. For full details and risks regarding the funds mentioned, please refer to our official website and fund offering documents.
This document is provided for your reference only and does not constitute an offer or solicitation to buy or sell any securities or funds, nor does it provide investment advice, nor was it prepared in connection with any such offer. This material is issued by China AMC (Hong Kong) Limited. This document has not been reviewed by the Securities and Futures Commission of Hong Kong.
Risk Disclaimer: The above content only represents the author's view. It does not represent any position or investment advice of Futu. Futu makes no representation or warranty.Read more
Comments
to post a comment
7
1