Summary of Key Points
Recently, international gold prices have seen a strong rebound: London gold briefly exceeded $4,400 per ounce, and COMEX futures approached $4,500; last week, physical gold rose by 7.44% on a weekly basis, the largest increase for the year so far. Gold ETFs both domestically and internationally have been attracting significant capital inflows. Institutions generally are bullish on the medium to long-term trend of gold prices (with targets often around $5,000 per ounce), but in the short term, there are risks to be aware of, such as geopolitical uncertainties, fluctuations in the dollar, and inflation data.
I. Why Did Gold Prices Suddenly Soar? Non-Farm Payrolls and Stagflation Expectations Are Key
The rise in gold prices is not accidental; there are two main driving factors:
1. Surprising U.S. Non-Farm Payrolls Data, Lowering Interest Rate Hopes: Last week, the number of non-farm jobs in the U.S. decreased by 23,000 in July (instead of the expected increase of 80,000), and although the unemployment rate fell, employment data was poor. This has reduced the likelihood of a Fed interest rate hike in September and even raised the possibility of a rate cut in the future. The dollar and gold are like a seesaw—if the dollar weakens, gold becomes more valuable, leading to increased demand.
2. Increasing Stagflation Expectations: Zhongtai Securities suggests that the U.S. may be entering a period of stagflation (economical growth is slow, but prices are still rising). Looking back at history, during the oil crisis in the 1970s, gold served as a hard currency to protect against inflation, with prices soaring. Now, there is concern that the U.S. economy might fall into this situation again, leading people to buy gold as a hedge.
II. Gold ETFs Have Become a "Money Magnet": Funds from Both Domestic and International Markets Are Flowing In
Gold ETFs are a way for individuals to invest in gold indirectly, and recent capital inflows have been substantial:
- Domestically: The top ETFs have attracted the most funds. Seven ETFs linked to Shanghai Gold 9999 have seen their assets increase by 21.3 billion yuan in the past week, with Huaan Gold ETF experiencing 18 consecutive days of net inflows (the longest streak since March 2025), accumulating over 9.5 billion yuan in funds, and their total assets exceeding 100 billion yuan. ETFs under Boshi and E Fund also have assets in the tens of billions.
- Internationally: The holdings of the world's largest gold ETF (SPDR) have continued to rise, with a total inflow of $3 billion in July, ending two months of outflows. Both domestic and international investors are using ETFs to accumulate gold, indicating consensus on the strength of the gold market.
III. Institutions Are Bullish: Can Gold Prices Reach $5,000 in the Future?
Many institutions are optimistic, with targets around $5,000 per ounce:
- Soochow Securities: Around the Fed meetings in August and September, gold prices are expected to reach $4,700-$5,000 (catalysts include non-farm payroll data, CPI, and central bank meetings).
- UBS: Gold prices are expected to break through $5,000 in the first half of next year, with a target of $5,200 by the end of June (reasons: declining U.S. bond yields, weakening dollar, and central banks continuing to buy gold).
- Standard Chartered/SaxoBank: Standard Chartered expects gold prices to challenge $5,000 again; SaxoBank is bullish in the long term, with a target of $4,900 by the end of 2026.
The core logic is that the credibility of the dollar is under threat (excessive money printing, fiscal deficits), and geopolitical turmoil is driving diversification of assets, increasing demand for gold as a safe-haven asset.
IV. Be Cautious When Buying at High Prices: These Risks Could Cause Volatility
Despite the long-term bullish outlook, caution is needed when buying at high prices:
1. Geopolitical and Dollar Uncertainties: The manager of Boshi Fund notes that this rise is a result of expectations being realized (there was previously little confidence in gold, but sudden data changes have changed opinions). Whether geopolitical conflicts continue or the dollar strengthens could lead to greater price volatility.
2. This Week’s CPI Data Is a Critical Test: Soochow Securities emphasizes that the July U.S. CPI data is crucial—low inflation would strengthen the case for rate cuts and further price increases, while high inflation might prompt the Fed to raise rates, putting pressure on gold prices.
3. High Short-Term Volatility: Guotai Fund suggests that despite increasing long-term demand, gold prices may experience significant short-term fluctuations, so avoid blind buying.
Conclusion
Gold is currently in a phase of "long-term bullishness with short-term volatility." If you want to invest in gold, it's advisable not to buy at high prices but to make purchases in batches. If you are only looking for short-term speculation, be aware of the risks associated with this week’s CPI data and Fed actions. After all, while gold is considered a safe asset, it is not guaranteed to always generate profits.