On Tuesday (August 11), during the European and American trading sessions, spot gold rebounded after hitting a low, currently trading around 4387, unchanged from yesterday's closing price. Amid the geopolitical game in the Middle East, Pakistan's Defense Minister publicly stated on Tuesday that signals from both the US and Iran point to the possibility of a potential agreement, and that recent developments are moving in a direction favorable to peace. This assessment has brought a glimmer of hope to the highly tense situation in the Middle East in recent days. Meanwhile, Pakistan's Interior Minister has arrived in Tehran for consultations. As a country maintaining contact with both the US and Iran, its mediating role may help bridge some differences. This statement echoes Qatar's earlier remarks that negotiations between Oman and Iran have entered a "high-level phase."

There remains a significant gap between the subtle shift in diplomatic signals and actual progress.

President Trump updated his bottom line in negotiations with Iran, demanding that Iran compensate victims of the war, attacks, and protests. This US counterattack against Iran's demands for war reparations has indeed had some effect, further reducing the space for a short-term reconciliation. Iranian Foreign Ministry spokesman Esmail Bagheei clearly stated that Iran will not resume shipping through the Strait of Hormuz unless the US lifts its maritime blockade of Iranian ports, compensates for long-term economic losses, and fully lifts economic sanctions. Currently, traffic through the Strait of Hormuz has plummeted to single digits. Geopolitical tensions have led to a strong surge in oil prices, resulting in a three-day winning streak. Oil prices have also fallen following news from Palestine, reflecting the global inflation center and causing the 10-year US Treasury yield to climb to 4.709%. Expectations for a Federal Reserve rate cut have been suppressed; the CME FedWatch tool even shows the market's bet on a September rate hike has fallen to 49.9%. Although hawkish officials such as Cleveland Fed President Hammarck have hinted at the possibility of multiple rate hikes, his overall remarks, as a representative of the Fed's three hawkish members, did not exceed market expectations.

Macroeconomic indicators and capital flows are in sync, and the bullish trend continues.

Despite rising expectations of tightening policies theoretically suppressing gold as a non-interest-bearing asset, multiple positive factors still fueled a bullish rally in the gold market: Dismal non-farm payroll data fueled easing expectations: The significantly weaker-than-expected US non-farm payroll data for July led to a 2.4% surge in spot gold prices on Friday, with a cumulative increase of 3.6% over the two trading days from Friday to Monday, closing firmly above $4390 on Monday. Both spot and futures prices rose in tandem: During Tuesday's trading session, spot gold rose slightly by 0.4%, reaching $4407.79 per ounce; US gold futures also rose 1.1%, settling at $4467.59 per ounce, a near eight-week high. Institutional optimism and physical buying provided support: IG Investment Bank's commodity strategy team explained that this rally was driven by a confluence of factors: FOMO (Fear of Missing Out) among those who missed the initial $4000 rally, concentrated short covering, and an influx of safe-haven funds. Furthermore, the People's Bank of China's gold reserve increase in July reached its highest monthly level since October 2023. Combined with large net inflows into domestic gold ETFs, this provides solid medium- to long-term support for gold prices. Key inflation data is about to set the tone: traders across the market are focused on Wednesday's US CPI (expected to rise 0.1% month-on-month) and Thursday's PPI data. This set of data will directly verify the extent of the US economic slowdown and determine the pricing of subsequent Federal Reserve policies.

CFTC gold position data shows that retail investors have once again missed out on potential gains.

The COT data updated last Saturday showed that before gold rose on August 4, there were signs of retail investors withdrawing and institutions increasing their positions. The main action of the institutions was to close most of their short positions, while retail investors closed their long positions at the same time, precisely reducing their total positions by one-third at the starting point of the rise. (Overview of CFTC CME Gold COT Position Changes)

Key points to watch in the market outlook:

The key bottleneck lies in the upcoming CPI/PPI report. If inflation data is lower than expected, market concerns about the Fed's tightening will ease, and a dollar pullback will push gold prices to new highs. However, if inflation data is strong, gold prices should be wary of potential short-term downward pressure from hawkish repricing. Technically, spot gold is currently consolidating at the upper edge of its trading range, awaiting the 5-day moving average to move up. If gold prices can stabilize within this range, coupled with a pullback to the 5-day moving average, a second upward move is likely. (Spot gold daily chart, source: FX678) At 20:30 Beijing time, spot gold is currently trading at $4391 per ounce.