Gold hit $4,680 this week, marking its highest in three months, fuelled by a weak dollar and record central bank buying.
This raised concerns that the precious metal can reach $5,000 as investor investment shifts.
Gold gained 2.4 per cent to hit $4,623.94 per ounce, its highest since May 15, when it reached $4,631.99, while gold futures in the United States rose 2.4 per cent to settle at $4,680.60. Gold and silver have seen a solid gain of around 5 percent.
Several factors support a continued rally, including central bank buying, investor sentiment shift, and technical momentum.
Gold buying in the second quarter reached a record level, with global net purchases remaining above 1,000 tons annually. According to the World Gold Council, the persistent institutional demand acts as a strong support base for prices.
According to the Bank of America Global Fund Manager Survey, 16% of managers net believe that gold is undervalued, which is the highest level since March 2023, compared to only 6% in July, reflecting a shift in investor sentiment.
Moreover, the U.S. federal debt recently surpassed $40 trillion, amplifying concerns about currency debasement and favouring gold as a hedge.
However, it also involves some risks. As CME Group’s FedWatch tool puts the probability of a rate hike at the December meeting at around 71%, which usually depresses gold prices. Moreover, higher oil prices and persistent inflation could reinstate pressure on yields, limiting further gains.
For gold investors, the coming weeks will be crucial. Key events to observe include remarks from Treasury chief Scott Bessent on Monday, August 24, the second estimate of Quarter II GDP on Wednesday, August 26, and July PCE inflation data, with core PCE expected at 0.2% month-on-month.
2026-08-23 01:07:00
