Since August 4, the international precious metals market has shaken off the previous adjustment gloom and embarked on a continuous upward march. Spot gold started from around $4,100/oz and re-crossed the $4,300 threshold in just three trading days. As of 17:00 on August 6, London gold hit an intraday high of $4,304.15/oz, a stage high since June 19; the main New York gold contract surged 4.20% in a single day to settle at $4,308/oz, recording its largest daily gain since February this year. Meanwhile, silver moved even more sharply, with the main New York silver contract rising 4.19% to $62.255/oz, while the main Shanghai silver contract closed at 15,260 yuan/kg, up 3.72%. Domestically, the main Shanghai gold contract approached 930 yuan/gram, and branded fine gold jewelry prices at many retailers rose to around 1,300 yuan/gram, up over 55 yuan per gram from the previous day, with market sentiment quickly warming.
ADP Shock: The Core Trigger of This Rebound
The direct catalyst for this round of gains was the unexpectedly weak U.S. employment data. The July ADP employment change, released on the evening of August 5, came in at just 44,000, far below the market expectation of 70,000, while the prior figure was revised down from 98,000 to 95,000, marking the smallest increase since January this year. As the market-recognized 'Small Nonfarm' indicator, ADP data is usually seen as a leading signal for the nonfarm payrolls report. Its significant miss sharply raised market expectations of a cooling labor market and further lowered the probability of another Fed rate hike in September.
After the data release, the U.S. dollar index and Treasury yields simultaneously plunged, providing strong support for gold and silver prices from a valuation perspective. Meanwhile, recent comments from Fed officials were generally moderate, without any unexpectedly hawkish signals, further dispelling market concerns. With multiple positives stacking up, gold and silver prices surged on heavy volume from the evening of August 5 through the day of August 6, with gold posting its biggest daily gain in the second half of the year.
Geopolitical Detente and Falling Oil Prices: Inflation Concerns Ease in Tandem
Besides macro data, marginal changes in the geopolitical landscape cannot be ignored. Talks between Iran and Oman on a temporary navigation agreement for the Strait of Hormuz are nearing completion, significantly easing market concerns about shipping disruptions and sending international oil prices sharply lower. Brent crude fell 5.3% in a single day to $79.36/barrel, while WTI crude dropped 5.7% to $75.77/barrel. The sharp pullback in oil prices eased worries about imported inflationary pressure and reduced the urgency for the Fed to be forced into further rate hikes, indirectly benefiting precious metals.
Notably, the decline in the geopolitical risk premium has also, to some extent, capped gold's safe-haven buying. Market participants pointed out that this round of gold price gains is more of a phased rebound driven jointly by 'macro data + expectation correction' rather than by pure risk-aversion, so the sustainability of its one-sided trend remains to be verified. Liu Siyuan, chief analyst at Lingxiu Finance, said that although gold prices may face profit-taking pressure after the rapid rally, short-term sentiment-sensitive funds will continue to provide momentum for the rise.
Why Has Silver Rallied Even Harder?
In this round, silver clearly outperformed gold, becoming the leader of the precious metals sector. Analysts note that silver has a dual nature as both a precious metal and an industrial metal. Against the backdrop of improving risk sentiment and better industrial demand expectations, silver has benefited from valuation repairs driven by its financial attributes while also being supported by the resilience of downstream industrial demand from photovoltaics, electronics, and other sectors, forming a 'dual-engine' pattern. In addition, silver's cumulative gain had lagged behind in the earlier phase, and the need for catch-up valuation also provided extra momentum. The phased repair of the gold-silver ratio has also become a focus of market attention.
Rebound or Reversal? Institutions Diverge
After the sharp rally in gold prices, debate over 'rebound or reversal' has heated up. On the optimistic side, CITIC Securities believes that with the accelerating expansion of the U.S. fiscal deficit, the difficulty of bridging geopolitical rifts under deglobalization, and continued central bank gold purchases providing a floor, gold remains in the bull market that began in 2015, and this decline is only a temporary correction within the bull market. The area around $4,000/oz is likely to be the bottom for this cycle, and gold prices are expected to return to an upward channel within the year.
The cautious camp, however, believes the current market is a phased rebound driven by factors such as easing geopolitical tensions and cooling rate-hike expectations. Although there is still upside room in the short term, the Fed's 'higher for longer' policy stance has not fundamentally changed, real interest rates will remain elevated and range-bound, and gold lacks support for a trend-like rally. Some institutions even warn that Q3 could become the most pressured phase for the gold market this year, with downside risks not fully cleared, and they are more optimistic about a systemic recovery after macro conditions improve marginally in Q4, targeting a rebound range of $4,300-4,500/oz. Shenyin & Wanguo Futures, meanwhile, noted that with a higher center of global geopolitical risk, worsening U.S. fiscal pressure, and continued de-dollarization, the center of precious metals prices has a basis for sustained upward movement.
Central Bank Gold Buying and Position Rebuilding: Long-Term Logic Unchanged
Putting aside short-term trading, the medium- and long-term support logic for precious metals remains solid. According to the World Gold Council, global central banks and other official institutions added a net 289 tonnes of gold reserves in Q2 this year, up 62% year on year, with many central banks actively increasing their holdings. According to the China Gold Association, China increased its gold reserves by 40.12 tonnes in H1 2026, reaching 2,346.45 tonnes by end-June, ranking fifth globally, with 20 consecutive months of increases since November 2024. A World Gold Council survey also showed that 45% of central banks surveyed expect to increase their gold reserves within the next year.
At the same time, expectations of institutional position rebuilding add further upside imagination to the gold sector. Public fund 2026 interim reports show that actively managed equity funds significantly reduced their nonferrous metals holdings in Q2, with gold positions falling to a near four-year low. Galaxy Securities analysis suggests that as U.S. inflation enters a downward phase and the impact of geopolitical conflicts gradually fades, gold prices are likely to bottom out and recover amid fluctuations. Combined with low institutional positioning, subsequent position rebuilding will drive a rebound in the gold sector.
Outlook and Allocation Suggestions
In the near term, market focus has shifted to the U.S. July nonfarm payrolls report due Friday evening. If the data continues the weak ADP trend, expectations for Fed policy could loosen further, and gold and silver may maintain a relatively strong trajectory. Conversely, if employment data surprises to the upside, bullish sentiment could be hurt, and gold prices may face profit-taking pressure. On the technical side, the reference range for the main Shanghai gold contract is 910-950 yuan/gram, and for the main Shanghai silver contract it is 14,800-15,800 yuan/kg; a breakout above these levels requires more volume support.
For ordinary investors, those with essential needs for gold jewelry can choose to buy in batches during price pullbacks, comparing brand workmanship fees and premiums first, and avoid chasing rallies to keep costs lower. For medium- and long-term asset allocators, it is recommended to use low-volatility instruments such as gold ETFs and physical gold bars, adopting batch dollar-cost averaging or adding positions on sharp dips, keeping the allocation within 15% of total assets, and holding for the long term to fully realize the allocation value.
(This article is compiled based on public market information and is for reference only, not constituting investment advice. Markets are risky; invest with caution.)
