Gold Sentiment Improves as Rate Hike Expectations Ease

Sentiment toward gold has turned more positive in August 2026, according to recent data. The U.S. Federal Open Market Committee left interest rates unchanged at its July meeting, and subsequent weakening of payrolls reports has reduced expectations for near-term tightening.

The collapse of the ceasefire between the U.S. and Iran renewed concerns over energy supplies and inflation, but subsequent efforts to de-escalate the conflict have pushed oil prices back down. The implications for gold are not straightforward, as geopolitical uncertainty can support safe-haven demand, but a sustained energy-price shock could revive inflation concerns.

Global gold exchange-traded product (ETP) purchases have resumed with 1.3 million ounces of inflows into gold ETPs between July 20 and August 13, reversing most of the outflows from the prior month. The World Gold Council reported that central banks bought 289 tonnes of gold in Q2 2026, their strongest quarter since 2010.

The People's Bank of China (PBoC) added 20 tonnes to its gold reserves in July, while the National Bank of Poland was the largest reported buyer in H1 2026 with 82 tonnes. Dollar weakness has also provided support for gold, as a weaker U.S. dollar can increase demand for gold.

The combination of reduced expectations for interest rate increases, renewed investor inflows, and recent dollar weakness has improved the near-term backdrop for gold. However, renewed disruption in the Middle East remains a two-sided risk, with both safe-haven demand and inflation concerns possible outcomes.