Gold Market Continues to Be Volatile
On July 18, London gold rose slightly to around $3,343, maintaining its recent volatile trend. The ongoing geopolitical tensions and uncertainty around the Federal Reserve's policy path have been key factors supporting gold prices. However, strong U.S. economic data and the rebound of the dollar have limited the rebound of gold prices.
Currently, the market's focus is on the Federal Reserve's monetary policy shift in the coming months. Previously, Trump's statement about "considering dismissing Powell" once caused gold prices to spike rapidly to $3,377, but subsequent softening of his stance led to cooling market sentiment, and gold prices declined to consolidate.
Federal Reserve Officials Signal Cautious Easing
Although the market anticipates rate cuts within the year, Federal Reserve officials remain generally conservative. San Francisco Fed President Daly stated that waiting until inflation fully reaches 2% before taking action could result in unnecessary harm to the economy. She still supports the idea of two rate cuts this year and emphasized that rate adjustments need to progress in sync with economic data.
New York Fed President Williams warned that tariffs will raise future inflation expectations, predicting the inflation rate will remain above 3% by 2025, hence the policy needs to remain prudently observant. Overall, the market remains watchful regarding a rate cut in September, as the interest rate path remains uncertain.
Geopolitics and Safe-Haven Demand Support Gold Prices
Global instability has also provided support for gold prices. A new round of U.S. tariffs targeting core goods like pharmaceuticals and copper has heightened global safe-haven sentiment. Additionally, some emerging market economies have opted to increase their gold reserves due to capital outflows, constituting substantial buying demand.
According to a World Gold Council survey, over 95% of central banks globally plan to increase gold reserves by 2025, setting a five-year high in this proportion. Diminished trust in the dollar system has been prompting global central banks to seek more diversified reserve strategies.
Optimism Remains for the Long Term
Many institutions maintain a long-term bullish view on gold. The weakening of dollar credit, high debt burdens, and lax fiscal discipline provide long-term support for gold.
Gold possesses both safe-haven and inflation-hedging attributes, making its value in uncertain macroeconomic conditions significant. Guohai Securities points out that continued central bank gold purchases will become a stabilizing force in supporting gold's long-term trend.
