Gold Prices Surge to Highest Weekly Gain Since January, Stabilizing Above $4,200

Gold prices recorded their largest weekly gain since January this week, stabilizing above $4,200. The main reasons for this increase include a reduction in geopolitical tensions and a slowdown in U.S. employment indicators, which have weakened expectations for interest rate hikes by the Federal Reserve. Throughout July, gold tested the $4,000 mark several times, but showed a strong rebound in the first week of August. Hopes for peace negotiations in the Middle East alleviated inflation concerns, contributing to the rise in gold prices. U.S. President Donald Trump mentioned that the war with Iran would soon come to an end, leading to a drop in oil prices, which in turn reduced inflationary pressures. Analysts at StoneX explained that hopes for peace in the Middle East have allowed gold to break free from its sideways movement above $4,000. The slowdown in the U.S. labor market also impacted the rise in gold prices. The July non-farm payroll report showed that the U.S. economy lost 23,000 jobs, significantly below Wall Street's expectation of an increase of 83,000 jobs. According to the CME FedWatch tool, traders have lowered the likelihood of a rate hike in September from 63% to 55%. The steady buying of gold by central banks is also a key factor providing downward rigidity to gold prices. According to the World Gold Council, central banks have purchased an average of 1,000 tons of gold annually for four consecutive years, with 45% of respondents indicating plans to increase their gold holdings over the next year. JP Morgan has raised its gold price target to $6,000 per ounce by the end of 2026.

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