Bloomberg News — On Monday, spot gold edged lower, briefly falling below the $4,000 mark to $3,991, a 0.6% decline. Escalating tensions between the U.S. and Iran pushed oil prices up over 3%, intensifying inflation concerns and putting downward pressure on gold as the dollar strengthened. Last week, gold posted its largest weekly decline in six weeks, falling 2.5%. Although economic data showed resilience and expectations of Fed rate hikes increased, gold’s technical indicators are severely oversold, with the $4,000 support level repeatedly tested. Analysts remain divided, with short-term pressure prevailing, though a rebound could emerge this summer as a catalyst. Amid geopolitical risks and policy uncertainties, gold’s outlook remains uncertain.
CoinMarketCap APP reports — On Monday, July 20, spot gold opened slightly weaker, briefly falling below the key psychological level of 4,000 USD. As of 07:15, it touched a low of $3,990.67 per ounce, down approximately 0.6%. This movement is not isolated but a direct reflection of the escalating tensions between the U.S. and Iran over the weekend. Oil prices surged more than 3%, with Brentcrude breaking above $91 and U.S. crude rising above $84, both hitting their highest levels since June 11. These moves intensified global inflation concerns and strengthened market expectations that the Federal Reserve may maintain high interest rates or even hike further. The U.S. Dollar Index edged higher to 100.86, adding further downward pressure on gold prices. Amid dual pressures from geopolitical risks and macroeconomic policy, traditional safe-haven asset gold is showing clear signs of strain.
Last week, the gold market experienced significant volatility. Although spot gold edged up 1% on Friday to $4,016.36 per ounce, it posted a weekly decline of approximately 2.5%, marking its largest weekly drop since early June. August gold futures rose just 0.7%, settling at $4,018.80. The focal point of the conflict is the ongoing confrontation between the United States and Iran in the Middle East: the United States conducted multiple nights of airstrikes targeting Iranian sites, including bridges, airports, air defense systems, and even nuclear power plant construction sites, while Iran retaliated with drones and missiles aimed at U.S. military bases in Jordan, as well as facilities in Kuwait and Bahrain, disrupting shipping in the Strait of Hormuz.
Since the outbreak of the U.S.-Iran war at the end of February this year, gold prices have fallen by approximately 25%. On the surface, the conflict should have boosted safe-haven demand, but the actual effect has been the opposite. The sharp rise in energy prices has become the key variable. Brent crude oil rose more than 15% last week and continued to climb at the start of this week, directly pushing up global inflation expectations. Chris Gaffney, President of Global Markets at EverBank, noted that a stronger U.S. dollar and heightened global inflation concerns are the primary drivers behind gold selling, which has pushed global interest rates higher. The instability of the Strait of Hormuz, a critical global energy transit route, has directly amplified supply chain risks, causing market anxiety over prolonged high inflation to override short-term safe-haven sentiment.
Meanwhile, the U.S. economy has demonstrated considerable resilience. Retail sales rose slightly in June, consumer confidence climbed to a five-month high, and the labor market remained stable. While these data have somewhat eased recession concerns, they have also given the Federal Reserve more policy flexibility in addressing inflation. The CME FedWatch tool shows that traders currently estimate a 58% probability of an interest rate hike in September; although the probability of a hike in July has declined to around 15%, the market still expects a cumulative 30-basis-point increase by the end of the year.
The U.S. Dollar Index ended last Friday essentially flat at 100.76, posting a weekly decline of 0.2%, but regained some ground amid inflows of safe-haven funds. Elias Haddad, Global Market Strategy Chief at Brown Brothers Harriman, analyzed that a global equity sell-off led by tech stocks, combined with disruptions in shipping through the Strait of Hormuz, triggered safe-haven sentiment, benefiting the dollar. A stronger dollar directly increases the cost for overseas buyers to hold gold, becoming a key factor suppressing gold prices.
The U.S. bond market also reflects mixed sentiments. Long-term Treasury yields edged lower last week, with the 10-year benchmark yield falling to 4.541% and the 30-year yield dropping to 5.064%, both recording weekly declines. The market has largely ruled out a Fed rate hike this month, but expectations for a September hike remain around 57%. Recent statements from Fed officials have been mixed, with some expressing concern over inflationary pressures while others acknowledge the stability of the labor market. Gennadiy Goldberg of TD Securities in New York noted that single-month data alone is unlikely to fully allay policymakers' concerns, especially as geopolitical risks are once again intensifying.
Notably, despite rising oil prices, bond yields have declined, indicating that bonds have served to some extent as a safe-haven asset. This contrasts with gold’s traditional role and has further diverted capital.
In the latest gold survey by Kitco News, Wall Street sentiment has turned bearish. Of 14 analysts, only one expects gold prices to rise this week, 79% predict a decline, and 14% anticipate sideways movement. Main Street retail investor sentiment is slightly more optimistic, with 40% bullish on higher prices, but overall caution still prevails.
The bearish sentiment primarily stems from short-term macroeconomic pressures. Thu Lan Nguyen of Commerzbank noted that the risk of rising energy prices due to escalating conflicts in the Middle East could keep expectations for rate hikes elevated for some time, limiting gold’s upside potential. Adam Barton of InvestingLive warned that selling in tech stocks could trigger a broad “sell-everything” rally.
However, some seasoned strategists see technical support. Paul Wong of Sprott Inc. noted that gold has been severely oversold, with multiple indicators showing levels two to three standard deviations below the norm. The $4,000 support level has been repeatedly tested below the 200-day moving average, and inflows into Chinese ETFs have partially offset outflows from Europe and the U.S. Seasonal factors also provide clues: gold typically forms bottoms in the summer, especially in early August, and historically, similar pullbacks have often been followed by catalyst-driven rallies, such as those triggered by the Jackson Hole symposium or unexpected events. Rich Checkan of Asset Strategies International believes the $4,000 level will continue to act as strong support, with new buying interest accumulating.
Adrian Day holds a neutral view, believing that gold will struggle to sustain an upward trend until the Federal Reserve clearly signals a shift to "no rate hikes," but central bank buying provides solid bottom support.
Overall, the current gold market is caught in a tug-of-war between multiple forces. While the ongoing escalation of the U.S.-Iran conflict has temporarily boosted oil prices and inflation expectations, pressuring gold prices, a further expansion of the conflict into broader regions could severely disrupt global supply chains, potentially reigniting safe-haven demand. Conversely, if signs of de-escalation emerge alongside continued resilience in U.S. economic data and greater clarity on the Fed’s policy path, gold prices may continue to face downward pressure.
This week’s market is relatively quiet, with only the European Central Bank decision and select U.S. economic data worth noting, potentially amplifying sensitivity to news headlines and geopolitical events. For investors, the $4,000 level has become a key psychological and technical threshold. Short-term volatility may persist, but from a medium- to long-term perspective, gold’s intrinsic value as a hedge against inflation and uncertainty remains intact. Historical patterns show that in oversold conditions, any positive catalyst—whether a policy shift or evolving geopolitical developments—could trigger a rebound.
The summer low for gold may be quietly taking shape; investors should closely monitor developments in the Middle East and the latest statements from Federal Reserve officials to find the optimal entry point amid a balance of risk and opportunity.
(Spot gold daily chart, source: E-HuiTong)
At 07:22 Beijing Time, spot gold is trading at $3,991.32 per ounce.
Geopolitical tensions escalate: rising oil prices become the biggest drag on gold prices.
Last week, the gold market experienced significant volatility. Although spot gold edged up 1% on Friday to $4,016.36 per ounce, it posted a weekly decline of approximately 2.5%, marking its largest weekly drop since early June. August gold futures rose just 0.7%, settling at $4,018.80. The focal point of the conflict is the ongoing confrontation between the United States and Iran in the Middle East: the United States conducted multiple nights of airstrikes targeting Iranian sites, including bridges, airports, air defense systems, and even nuclear power plant construction sites, while Iran retaliated with drones and missiles aimed at U.S. military bases in Jordan, as well as facilities in Kuwait and Bahrain, disrupting shipping in the Strait of Hormuz.
Since the outbreak of the U.S.-Iran war at the end of February this year, gold prices have fallen by approximately 25%. On the surface, the conflict should have boosted safe-haven demand, but the actual effect has been the opposite. The sharp rise in energy prices has become the key variable. Brent crude oil rose more than 15% last week and continued to climb at the start of this week, directly pushing up global inflation expectations. Chris Gaffney, President of Global Markets at EverBank, noted that a stronger U.S. dollar and heightened global inflation concerns are the primary drivers behind gold selling, which has pushed global interest rates higher. The instability of the Strait of Hormuz, a critical global energy transit route, has directly amplified supply chain risks, causing market anxiety over prolonged high inflation to override short-term safe-haven sentiment.
Meanwhile, the U.S. economy has demonstrated considerable resilience. Retail sales rose slightly in June, consumer confidence climbed to a five-month high, and the labor market remained stable. While these data have somewhat eased recession concerns, they have also given the Federal Reserve more policy flexibility in addressing inflation. The CME FedWatch tool shows that traders currently estimate a 58% probability of an interest rate hike in September; although the probability of a hike in July has declined to around 15%, the market still expects a cumulative 30-basis-point increase by the end of the year.
Dollar and bond market alignment: Gold's safe-haven appeal is weakened
The U.S. Dollar Index ended last Friday essentially flat at 100.76, posting a weekly decline of 0.2%, but regained some ground amid inflows of safe-haven funds. Elias Haddad, Global Market Strategy Chief at Brown Brothers Harriman, analyzed that a global equity sell-off led by tech stocks, combined with disruptions in shipping through the Strait of Hormuz, triggered safe-haven sentiment, benefiting the dollar. A stronger dollar directly increases the cost for overseas buyers to hold gold, becoming a key factor suppressing gold prices.
The U.S. bond market also reflects mixed sentiments. Long-term Treasury yields edged lower last week, with the 10-year benchmark yield falling to 4.541% and the 30-year yield dropping to 5.064%, both recording weekly declines. The market has largely ruled out a Fed rate hike this month, but expectations for a September hike remain around 57%. Recent statements from Fed officials have been mixed, with some expressing concern over inflationary pressures while others acknowledge the stability of the labor market. Gennadiy Goldberg of TD Securities in New York noted that single-month data alone is unlikely to fully allay policymakers' concerns, especially as geopolitical risks are once again intensifying.
Notably, despite rising oil prices, bond yields have declined, indicating that bonds have served to some extent as a safe-haven asset. This contrasts with gold’s traditional role and has further diverted capital.
Analyst Perspectives Diverge: Short-Term Pressure vs. Technical Oversold Rebound Potential
In the latest gold survey by Kitco News, Wall Street sentiment has turned bearish. Of 14 analysts, only one expects gold prices to rise this week, 79% predict a decline, and 14% anticipate sideways movement. Main Street retail investor sentiment is slightly more optimistic, with 40% bullish on higher prices, but overall caution still prevails.
The bearish sentiment primarily stems from short-term macroeconomic pressures. Thu Lan Nguyen of Commerzbank noted that the risk of rising energy prices due to escalating conflicts in the Middle East could keep expectations for rate hikes elevated for some time, limiting gold’s upside potential. Adam Barton of InvestingLive warned that selling in tech stocks could trigger a broad “sell-everything” rally.
However, some seasoned strategists see technical support. Paul Wong of Sprott Inc. noted that gold has been severely oversold, with multiple indicators showing levels two to three standard deviations below the norm. The $4,000 support level has been repeatedly tested below the 200-day moving average, and inflows into Chinese ETFs have partially offset outflows from Europe and the U.S. Seasonal factors also provide clues: gold typically forms bottoms in the summer, especially in early August, and historically, similar pullbacks have often been followed by catalyst-driven rallies, such as those triggered by the Jackson Hole symposium or unexpected events. Rich Checkan of Asset Strategies International believes the $4,000 level will continue to act as strong support, with new buying interest accumulating.
Adrian Day holds a neutral view, believing that gold will struggle to sustain an upward trend until the Federal Reserve clearly signals a shift to "no rate hikes," but central bank buying provides solid bottom support.
Looking ahead: Conflict catalysts could become key turning points for gold prices
Overall, the current gold market is caught in a tug-of-war between multiple forces. While the ongoing escalation of the U.S.-Iran conflict has temporarily boosted oil prices and inflation expectations, pressuring gold prices, a further expansion of the conflict into broader regions could severely disrupt global supply chains, potentially reigniting safe-haven demand. Conversely, if signs of de-escalation emerge alongside continued resilience in U.S. economic data and greater clarity on the Fed’s policy path, gold prices may continue to face downward pressure.
This week’s market is relatively quiet, with only the European Central Bank decision and select U.S. economic data worth noting, potentially amplifying sensitivity to news headlines and geopolitical events. For investors, the $4,000 level has become a key psychological and technical threshold. Short-term volatility may persist, but from a medium- to long-term perspective, gold’s intrinsic value as a hedge against inflation and uncertainty remains intact. Historical patterns show that in oversold conditions, any positive catalyst—whether a policy shift or evolving geopolitical developments—could trigger a rebound.
The summer low for gold may be quietly taking shape; investors should closely monitor developments in the Middle East and the latest statements from Federal Reserve officials to find the optimal entry point amid a balance of risk and opportunity.
(Spot gold daily chart, source: E-HuiTong)
At 07:22 Beijing Time, spot gold is trading at $3,991.32 per ounce.