In the first week of August, international gold prices staged a breath-taking "V-shaped" reversal. On August 5, spot gold in London surged 4.16% in a single day to close at $4,247.17 per ounce, marking its biggest daily gain since February. On August 6, prices briefly reclaimed the $4,300-per-ounce level for the first time since June 18. Within just a few trading sessions, gold climbed more than $250 from the bottom near $4,000, while A-share precious metals stocks also rallied, with Zhaojin Gold, Shanjin International, Western Gold and others rising over 4%. "Is the bull market back?" and "Is it too late to buy gold now?" have once again become hot topics among investors.
Multiple Tailwinds: Cooling Jobs Data and Easing Geopolitics Ignite the Rebound
This sharp rally was no coincidence, but the result of four forces converging: macro expectations, geopolitical conditions, capital flows, and central bank allocation. The first to loosen was the key variable that had been suppressing gold prices—expectations for Fed monetary policy.
The latest US ADP employment data for July showed an increase of only 44,000 jobs, far below the 70,000 expected and a notable drop from the previous reading—the smallest gain since January. This cooling signal quickly transmitted to the rate-pricing end: the CME "FedWatch" tool showed the probability of holding rates steady in September had risen to around 45%, while previously elevated rate-hike expectations clearly receded. Lower rate expectations dragged down the dollar index and Treasury yields, directly reducing the opportunity cost of holding gold.
Meanwhile, geopolitical tensions showed signs of easing. According to US media reports, US Treasury Secretary Bessent said a deal on the Strait of Hormuz could be reached on August 4 or 5, easing market concerns that energy prices would fuel inflation. Earlier, the market had been crowded with bets on hawkish policy. When the "small non-farm" data punctured that narrative, short covering, trend-following capital, and allocation flows converged, pushing gold higher than conventional models could explain.
Goldman Sachs' commodities research team cited "the return of Chinese capital" as the most important immediate trigger for this rally. Its monitoring showed that open interest in gold futures on the Shanghai Futures Exchange rose by about 19,000 lots in a single day, up about 6%—one of the most significant one-day increases in three years. Huaan Gold ETF saw net inflows for 16 consecutive trading days, totaling roughly 6.041 billion yuan. After gold fell back near $4,000, medium- and long-term funds showed a significantly stronger willingness to allocate, and the periodic adjustment in A-shares also prompted some capital to shift toward gold as a low-correlation asset.
Central Bank Buying: The Most Solid "Slow Variable"
If short-term data and geopolitical news are the "igniter" of the rally, continued central bank buying is the most solid pillar of gold's medium-to-long-term logic. The World Gold Council's Global Gold Demand Trends Report for Q2 2026 showed that global central banks and other official institutions added 289 tonnes of gold to their reserves net in the quarter, up 62% year-on-year—the strongest second quarter on record.
Among them, Poland led with 51 tonnes purchased, lifting its reserves to 632 tonnes. China added 33 tonnes in Q2, continuing its long-term allocation pace. The People's Bank of China has now increased gold reserves for 20 consecutive months, reaching 2,346.45 tonnes by the end of June, firmly ranking fifth globally. The Bank of Korea resumed gold purchases after 13 years—though limited in scale, it was highly symbolic: economies long absent from the gold market are reassessing gold's role in their foreign exchange reserves. A WGC survey also showed that 89% of central banks polled expect global official gold reserves to increase further over the next 12 months.
Looking at these figures, a key logic emerges: central banks do not buy gold for short-term returns, so they rarely cause sharp fluctuations, but they provide steady support when prices fall. Against a backdrop of widening de-globalization cracks, expanding US fiscal deficits, and normalized geopolitical risk, the diversification of global reserve assets resembles a "slow variable" lasting many years, limiting gold's downside and gradually lifting its long-term price center. This is why the market widely regards $4,000 per ounce as an important bottom for this correction.
Why Buy Gold? Three Layers of Logic for Ordinary People
Back to the fundamental question: "Why buy gold?" For ordinary investors, gold's value can be understood at three levels:
- Wealth preservation against inflation. The purchasing power of fiat currency erodes over time, while gold's supply is naturally limited. During periods of rising inflation or excessive money printing, physical gold maintains relatively stable purchasing power, making it an important tool for preserving wealth.
- Risk diversification. Gold has low correlation with traditional assets such as stocks and bonds. When equity volatility intensifies or credit assets come under pressure, gold often acts as a hedge against portfolio swings, making the overall asset mix more resilient.
- Tail-risk insurance. In extreme scenarios such as geopolitical conflict, sovereign debt crises, or financial system turmoil, gold's attributes of not relying on any single country's credit and being globally liquid make it a true "anchor."
CITIC Securities' macro asset team believes gold remains in the major bull market that began in 2015, with three long-term logics unchanged: the US federal deficit is almost irreversibly rising year by year; geopolitical conflict and intensified de-globalization remain the cornerstone of gold pricing; and central banks continue to buy gold in large amounts with increasing attention each year. The recent decline was merely a temporary correction within a bull market, and the current drawdown has approached historical extremes, with $4,000 per ounce likely representing this cycle's bottom zone.
Buying Gold Is Not a "Blind Rush": Timing and Risk Matter Just as Much
However, multiple tailwinds do not mean gold prices will move in a straight line. Reviewing the first half of the year, the gold market was a veritable rollercoaster: gold surged from $4,318 in January to a record $5,598.75, then kept falling, broke below $4,000 in late June, and dropped nearly 30% from its peak. June's monthly decline of 10.45% was the largest since October 2008. Such violent swings remind every investor: gold is a long-term allocation asset, not a short-term speculation tool.
Industry insiders point out that gold's subsequent moves will remain a tug-of-war between bullish and bearish factors. The major bull-market logic is intact, but short-term volatility will expand significantly. Further upward progress still requires US inflation and employment data to keep weakening to confirm a policy pivot, and geopolitical conditions may also fluctuate. After the sharp short-term surge, gold may consolidate or pull back to digest gains, with $4,500 per ounce being a key resistance level to watch in the next phase.
For ordinary investors, three suggestions are worth considering:
- Build positions in batches rather than making one-time bets, and avoid chasing rallies or panic-selling; medium-and-long-term allocation funds can gradually enter during pullbacks and consolidation.
- Distinguish between investment gold and jewelry gold: investment bars carry lower premiums and track gold prices more closely, making them suitable for asset allocation; jewelry gold includes craftsmanship and brand premiums, primarily serving wearing and gifting needs, and should not be judged by investment returns.
- Watch key variables: the US July non-farm payrolls report, policy signals from the August Jackson Hole central bank symposium, and whether central bank purchases and gold ETF inflows can continue to provide support.
It is worth noting that the sharp rise in gold prices has quickly passed through to domestic consumption. On August 6, Laomiao Gold's quote for fine gold jewelry jumped from 1,236 yuan/gram to 1,299 yuan/gram, up 63 yuan in a single day; Chow Sang Sang also raised its quote to 1,295 yuan/gram. Chasing gold jewelry at high levels requires even more rationality. As industry insiders put it: whether it is investment bars or gold jewelry, decisions should be based on one's actual needs—neither blindly chasing highs nor blindly bottom-fishing.
Conclusion
From the repeated confirmation of the $4,000 bottom to reclaiming the $4,300 level, this rebound once again validates gold's allocation value in an era of uncertainty. Continued central bank purchases, shifting Fed policy expectations, and normalized geopolitical risk together form the underlying logic for gold's medium-to-long-term uptrend. For ordinary people, buying gold is not about predicting every high and low, but about adding a measure of "certainty" to one's portfolio that can ride through cycles. Markets carry risks; invest with caution. Rational allocation and long-term holding are the most basic wisdom of buying gold.
