Gold Soars to $4,400 as China Continues Its Purchases

Gold has just crossed a threshold that attracts all eyes. Above $4,400 an ounce, the precious metal benefits from a particularly favorable cocktail: weakness in the U.S. job market, anticipation of a more lenient monetary policy, and ongoing purchases from China. These factors are compounded by geopolitical tensions and rising oil prices, which rekindle inflationary fears. In the face of economic and monetary uncertainties, investors and central banks are increasing their exposure to gold.

In brief

• The yellow metal has surpassed the $4,400 mark, reaching a two-month high between $4,434 and $4,435 an ounce.
• The unexpected loss of 23,000 jobs in the U.S. in July has lowered bond yields and validated the technical breakout above the 100-day moving average.
• The People's Bank of China has been accumulating gold for the 21st consecutive month, bringing its official reserves to 76.08 million ounces.
• The 5% rise in oil prices revives inflation fears and calls into question the usual correlation between energy and precious metals.

U.S. Employment Statistics Renew Speculation on Fed Rates

The release of the latest employment report in the United States had a real impact on the precious metals market. Indeed, 23,000 jobs were lost in the U.S. economy during the month of July. This situation caught many economists off guard. They had anticipated the creation of approximately 80,000 new jobs. The significantly revised figures from previous months largely contributed to this outcome.

These disappointing labor market statistics quickly forced traders to reassess their various expectations regarding the monetary policy of the Federal Reserve. By drastically reducing bets on a likely short-term rate hike, investors contributed to the decline in U.S. Treasury bond yields. This, in turn, gives gold significant breathing room. The yellow metal then reached an intraday high between $4,434 and $4,435 an ounce. It subsequently soared to $4,467 this evening, marking a remarkable increase following the summer correction that had brought the price down to $3,966.

Moreover, this rebound allowed the precious metal to significantly exceed its 100-day moving average. This is a signal closely watched by traders, as it is likely to trigger a wave of additional acquisitions. From a technical analysis perspective, the decline in bond yields can reduce the opportunity cost of gold compared to debt securities or cash investments, as it yields no return. Such a situation may encourage capital to disengage from bonds.

Thus, attention is now focused on the upcoming release of the U.S. Consumer Price Index (CPI) statistics. This data will determine whether this rebound beyond $4,400 can be sustained or if a recovery in yields would invalidate this bullish breakout. The 200-day moving average and the $4,500 threshold are the next major technical targets identified by investors.

To summarize, several key figures are worth noting:

• The intraday high reached: between $4,434 and $4,435 an ounce;
• The stabilization price: $4,378.50 at noon, then $4,382.43 at 1 PM EDT on August 11;
• A low point of the summer correction estimated at $3,966 an ounce.

Gold Buying: The People's Bank of China Strengthens Its Shield Against Monetary Tensions

Like the American macroeconomic environment, the dynamics driven by gold receive constant institutional support from the People's Bank of China (PBOC). Indeed, the banking institution of the Middle Kingdom has just extended its gold acquisition program for the 21st consecutive month. This regularity has materialized with the purchase of an additional 20 tons, or approximately 640,000 ounces, during the month of July.

Thus, the official figures for China's gold reserves, an influential member of the BRICS alliance, now rise to approximately 76.08 million ounces thanks to such contributions. Regular positive flows in Chinese gold-backed ETFs also reinforce this trend, supporting an alignment between state strategy and the appetite of private investors.

The ultimate appeal of gold for central banks lies in its balance sheet and sovereign neutrality. It is an independent asset. The precious metal does not rely on the signature of any government or monetary issuer. Such a quality provides a structural floor under prices even during periods of dollar strength. Systematic accumulation by major state financial institutions contributes to reducing the floating supply in the global market. Moreover, this trend provides sustainable support for prices, regardless of the daily fluctuations observed in the American derivatives market.

Geopolitical Risks in the Middle East and Oil Shock

Geopolitical tensions in the Middle East undoubtedly weigh on this monetary picture. Thus, the closure of the Strait of Hormuz and the deterioration of relations between Tehran and Washington raise fears of continuous disruptions in energy supply. Such instability has caused a 5% spike in crude oil prices, fueling the threat of a general increase in production-related costs.

Economist Peter Schiff commented on this matter on social media platform X. He stated that gold and silver have risen today, alongside the 5% increase in oil. Precious metals are breaking free from the negative correlation that had recently developed with oil. Gold and oil should rise together as inflation drives up the CPI and bond yields, while the American economy weakens with the ongoing destruction of jobs.

A risk of stagflation may thus emerge from the simultaneous surge in energy commodity prices and precious metals. In such a scenario, where economic stagnation is accompanied by a rise in the price index, the Federal Reserve (Fed) would find itself in a dilemma between supporting a wavering job market and combating energy-induced inflation.