Gold market comment on behalf of Dilin Wu

Today’s market analysis on behalf of Dilin Wu Research Strategist at Pepperstone

Gold hit the May high of $2,450 during the session, and then the market is at a standstill between bulls and bears. I see this pullback as just a temporary blip. The underlying bullish factors for gold remain strong, and it’s only a matter of time before we see a new all-time high.

Looking at the Fed’s policy stance, even though June’s US core PCE came in higher than expected, it hasn’t derailed the near certainty of a September rate cut, as confirmed by the FOMC meeting and Powell’s comments. Lower interest rate is definitely positive for gold, which, like a steadfast lighthouse in a storm, stands firm as a zero-yield asset.

Geopolitically, the recent flare-ups in the Middle East and rising U.S. election uncertainties are significant. With Harris’s support narrowing the gap with Trump and recent polls erasing Trump’s lead in swing states, the dollar is under pressure. This safe-haven demand and expectations of a weaker dollar are like strong winds at gold’s back, pushing prices higher.

As for gold demand, the World Gold Council’s report on July 30th shows that global gold demand in Q2 and official gold reserves for the first half of the year have reached all-time highs, providing a solid foundation for gold prices.

Overall, I think the economy and geopolitical instability, combined with robust global gold demand, are set to keep gold prices high.

Tomorrow’s U.S. non-farm payroll report is a key risk event. From my perspective, if job gains fall below 140,000 and the unemployment rate exceeds 4.1%, gold could very well challenge the historic high of $2,483, like a comet streaking towards its apex.