Dollar Slump Lifts Gold Above $4,400

On Monday, spot gold prices strengthened notably, rising over 1% intraday and trading near $4,407. The core driver of this rally is the overall weakening of the U.S. dollar and declining U.S. Treasury yields. Weak U.S. inflation data released earlier significantly reduced market speculation about the Federal Reserve maintaining a hawkish policy stance, providing upward momentum for gold, a non-yielding asset.

**Dual Pressure from Dollar and Rate Expectations**

The key to gold's recent rebound lies in the marginal easing of the strong-dollar and high-rate environment. According to analysts, the U.S. July non-farm payrolls data fell far short of market expectations, significantly cooling market expectations for a Fed rate hike in September, leading to a simultaneous pullback in the dollar index and U.S. Treasury yields. Combined with joint U.S.-Japan intervention in the FX market to boost the yen, which further pressured the dollar, the dollar index briefly fell below the 100 level. This shift in the macro environment has lowered the holding cost of gold, enhancing its appeal.

**Geopolitical Risks and Central Bank Buying Provide Support**

Beyond monetary policy expectations, geopolitical uncertainty has also fueled safe-haven buying for gold prices. Market reports indicate that concerns over shipping safety around the Strait of Hormuz have intensified, increasing uncertainty in global trade and energy supply and bolstering gold's safe-haven demand. Meanwhile, sustained central bank gold purchases have laid a solid foundation for the market. Data from the World Gold Council shows that global central banks net purchased 288.9 tonnes of gold in Q2 this year, up 411% quarter-on-quarter. As of end-July 2026, the People's Bank of China has increased its gold holdings for the 21st consecutive month, reflecting official institutions' recognition of gold's long-term value.

**Short-Term Volatility Ahead; Chasing Highs Requires Caution**

Despite gold prices returning to the $4,400 level, recent price action has shown clear signs of repeated fluctuations. Market observers note that gold quickly broke above $4,400 intraday on August 11 and touched around $4,436, but subsequently staged a sharp pullback from highs, indicating significant profit-taking pressure at that level. Some analysts caution that while the medium-to-long-term logic supporting higher gold prices remains intact, short-term market sentiment and capital battles are intense, and ordinary investors should avoid chasing highs on short-term moves and instead build a long-term allocation mindset.