Gold Surges on Strong China Demand Amid Easing Inflation Fears

Gold prices surged above $4,300 per ounce on August 5, marking a 4% gain as renewed Chinese demand and easing inflation concerns boosted the precious metal to its highest level since June.

Chinese gold-backed exchange-traded funds recorded their longest streak of inflows at 14 consecutive days through August 3, with buying helping stabilize bullion after a sharp second-quarter correction. The People's Bank of China added 33 tonnes of gold during the second quarter, its largest quarterly purchase since late 2023, while global central banks bought a net 288.9 tonnes, according to World Gold Council data published on July 30.

The rally followed signs of progress in talks between the United States and Iran, which pressured oil prices and eased fears that higher energy costs could reignite inflation and force the Federal Reserve to maintain restrictive interest rates. Lower Treasury yields also supported gold, as it generally becomes more attractive when bond yields decline.