Gold Prices Soar on Rate Optimism and Sovereign Buying

Gold prices surged last week to their best week since January, rising over 7% as rate hike expectations fell and central bank demand soared. According to analysts at Heraeus, gold prices broke out of a six-week range to trade above $4,300 per ounce. The rally was driven by hopes for a deal to reopen the Strait of Hormuz, which would ease concerns about oil prices and consumer inflation.

The Federal Reserve's likelihood of raising interest rates this month reduced as Brent crude prices fell below $85 per barrel. Analysts at Heraeus note that lower consumer prices could diminish the case for monetary tightening if the Strait opens soon and oil prices continue to fall. Central bank gold buying accelerated in June, with reported reserves increasing by 51 tonnes, up from 41 tonnes in May.

Poland and China were among the largest buyers, adding 19 tonnes and 15 tonnes respectively. Uzbekistan added 9 tonnes, while Kazakhstan and Singapore each bought 7 tonnes. In contrast, Russia and Turkey were net sellers in June. Despite combined sales of 127 tonnes by these two countries, reported net buying reached 102 tonnes in H1'26, indicating official-sector demand remains a key source of support for gold.

In silver markets, Indian import controls drove domestic demand lower in July, with imports totaling just 1.04 million ounces, down more than 92% year-on-year from 13.8 million ounces in July 2025. The collapse follows measures introduced in May to reduce precious metal imports and conserve foreign exchange.