Gold Rally Faces Make-or-Break Moment at Jackson Hole
Gold's August rally has been driven largely by shifting expectations for Federal Reserve interest rates. The metal surged over 10% in August to above $4,400 per ounce, its strongest monthly gain since January.
The recovery was fueled by softer crude prices and optimism around a Hormuz shipping arrangement, which reduced supply-disruption premiums in oil. Global gold ETFs saw inflows of 23.5 tonnes in July, reversing two months of outflows.
However, the rally has stalled as global yields rise and long-term borrowing costs reach multi-decade highs. The 10-year US Treasury yield climbed to 4.75%, its highest level in 20 months, while the 30-year yield reached a 19-year high.
The conflicting environment is partly responsible for gold's failure to break above $4,400. Elevated oil prices sustain inflation concerns, which keep the hawkish Fed scenario alive and negatively impact non-yielding bullion.
Despite this, there is genuine structural support beneath the price of gold. The People's Bank of China added 20 tonnes to its gold reserves in July, extending its buying streak to a record 21 consecutive months.