Thursday (August 13th) witnessed a dramatic surge followed by a sharp decline. Spot gold rallied strongly, driven by multiple positive factors, briefly touching a two-month high. However, just as the market anticipated a breakout above the $4,500 mark, massive profit-taking quickly pushed the price back to its starting point. Cooling inflation data, fluctuating expectations for a Fed rate hike, and geopolitical tensions in the Strait of Hormuz—three forces are currently engaged in a fierce battle between bulls and bears in the gold market.

I. Surge and Retreat: Gold Prices Experience a "Double Kill" After Hitting a Two-Month High

On August 13th, spot gold prices experienced a dramatic day. During the session, gold prices climbed to $4449.39 per ounce, the highest level since June 5th. Previously, boosted by a moderate rise in the US July Consumer Price Index, gold prices had strengthened for several consecutive days, with Comex gold futures even breaking through $4500 per ounce to reach $4509.10 per ounce. However, just as the bulls were celebrating, market sentiment reversed sharply – spot gold subsequently fell significantly, ultimately closing down 1.3% at $4350.88 per ounce, having touched a low of $4343.79 during the session. COMEX gold futures closed near $4407 per ounce. It's worth noting that on Wednesday (August 12th), COMEX gold futures also rose to $4502, but closed back near $4469. StoneX Senior Market Strategist Bob Haberkorn succinctly pointed out the crux of the problem: "$4,500 is a significant resistance level for gold. We've touched that level twice, but gold subsequently retreated from that point each time. Currently, traders are quite nervous approaching the $4,500 mark." The repeated failures to break through this key psychological level, coupled with the significant gains gold prices have accumulated in the short term, have led to a surge in profit-taking, pushing gold prices into a volatile trading pattern. Looking at a longer timeframe, the gold market in 2026 is poised for significant volatility. At the beginning of the year, spot gold briefly surged to a historical peak of $5,596.33 per ounce, before entering a sustained correction. On June 30th, it even touched $3,943.65 per ounce intraday, a pullback of approximately 29.53% from its year-to-date high. The strong rebound since August is merely a sharp rebound within this long correction, while the repeated failures to break through the $4,500 mark clearly illustrate the intense tug-of-war between bulls and bears in this area.

II. Cooling Inflation and Interest Rate Hike Expectations: Market Game Under the Fed's "Dilemma"

The core driver of this gold price rebound is the moderate performance of US inflation data and the resulting cooling of expectations for a Federal Reserve interest rate hike. The US Consumer Price Index (CPI) released on August 12 showed a 3.4% year-on-year increase in July, lower than June's 3.5%, in line with economists' expectations. Following closely on August 13, the US Department of Labor released the Producer Price Index (PPI) for July, which was flat month-on-month, also lower than the market expectation of a 0.2% increase. Both consecutive inflation reports pointed to easing price pressures, significantly weakening market bets on a September rate hike by the Federal Reserve. According to the CME Group's FedWatch tool, the market's probability of a rate hike at the September meeting had fallen to 34% after the PPI data release, down from 55% a week earlier. Federal funds rate futures showed that traders expect a rate hike of about 23 basis points by the end of the year, compared to a 27 basis point expectation on Wednesday. The bond market also confirmed this trend—the yield on the two-year US Treasury note fell to its lowest level since mid-July, and the yield on the 10-year Treasury note fell 5.3 basis points to 4.639%. Stephen Brown, chief economist for North America at Capital Economics, stated unequivocally, "It now appears that the likelihood of the FOMC raising rates as early as September has significantly decreased." However, not everyone is so optimistic. Stephen Stanley, chief economist at Santander Bank, believes that if the core PCE rose 0.25% month-over-month in July, "that would essentially constitute a sufficient reason to support a September rate hike." Bank of America even reiterated its aggressive prediction of three rate hikes this year in August. More importantly, divisions within the Federal Reserve are intensifying. Cleveland Federal Reserve President Hamak stated clearly on August 10 that inflation has not yet returned to the target level, and the Fed may need to raise rates multiple times. She bluntly stated that a 25 basis point rate hike "would not have a significant impact on the economy," and that the current interest rate range of 3.5%–3.75% has not significantly constrained the economy. At the July Fed meeting, Hamak was one of the three officials who voted against maintaining the current interest rate. A journalist, often referred to as the "Fed's mouthpiece," pointed out that this was the first time since 2016 that three unanimous dissenting votes had appeared in the same policy decision. This high degree of uncertainty regarding policy path is precisely the root cause of the sharp fluctuations in the gold market. On the one hand, cooling inflation has reduced the urgency of raising interest rates, which is beneficial to gold, a zero-interest asset; on the other hand, hawkish voices continue to be heard, and the sword of Damocles of interest rate hikes always hangs over the market.

III. The Strait of Hormuz: The "Energy-Inflation-Gold" Transmission Chain Amid Geopolitical Storms

If inflation data determines the short-term direction of gold, then the geopolitical situation in the Strait of Hormuz constitutes a deeper variable influencing gold price movements. Since the US-Israel attacks on Iran on February 28, Tehran has effectively blocked the Strait of Hormuz—previously, one-fifth of the world's oil and liquefied natural gas were transported through this strait. On August 13, Hossein Taeb, the new head of Iran's Basij paramilitary organization, publicly declared that the Strait of Hormuz was "under Iranian control and management." The Iranian Joint Military Command subsequently further stated that no vessel was allowed to pass through the Strait of Hormuz without Tehran's permission. Just the day before, US President Trump had claimed that the US had "complete control" over this strategic waterway. The war of words between the US and Iran over control of the strait has escalated again. In June of this year, the two countries reached a temporary ceasefire agreement and called for the restoration of freedom of navigation, but the agreement broke down a few weeks later, with both sides accusing each other of violating the agreement. An advisor to Iran's Supreme Leader even stated bluntly that if Tehran's conditions are not met, the strategy will be an "offensive war." The impact of this geopolitical storm on gold is far more complex than it appears on the surface. Traditional logic dictates that geopolitical conflicts benefit gold through safe-haven demand, but the transmission path of this round of Middle East conflict is more subtle. As analysts have pointed out, the old transmission chain is "geopolitical conflict raises oil prices—pushes inflation expectations—strengthens interest rate hike expectations—suppresses gold prices"—making rising oil prices a negative factor for gold. Glen Smith, Chief Investment Officer of GDS Wealth Management, bluntly stated: "Thursday's PPI data alone will not change the Fed's decision-making logic, because the key to curbing inflation currently lies in resolving the Middle East situation or establishing oil pipelines to reduce dependence on the Strait of Hormuz, something the Fed has no influence over." Currently, the US has deployed more than 20 warships in the Middle East, strictly enforcing blockade measures against Iran. US oil prices have fallen back to around $75 per barrel, easing domestic energy price pressures. However, Iran has elevated the control of the Strait of Hormuz to a national strategic level, approving the "Strategic Action Plan for Ensuring the Security and Development of the Strait of Hormuz" through parliament, elevating the Strait issue from a battlefield issue to a long-term strategic arrangement. This means that the stalemate in the Taiwan Strait is unlikely to be broken in the short term, and geopolitical risk premiums will continue to be an important part of gold pricing.

IV. The long-term logic remains unchanged: Structural support from central bank gold purchases and de-dollarization.

Despite sharp short-term fluctuations, the medium- to long-term support for gold remains solid. The global central bank gold-buying spree is far from over. Data from the World Gold Council shows that global central banks net purchased 288.9 tons of gold in the second quarter of this year, a 411% increase quarter-on-quarter and a 62% increase year-on-year. The People's Bank of China's gold reserves reached 76.08 million ounces at the end of July, an increase of 640,000 ounces from the end of June, marking the 21st consecutive month of increases. The Bank of Korea even resumed gold purchases after a 13-year hiatus. In July, global gold ETFs ended two consecutive months of outflows, achieving a net inflow of 23 tons. A research report from an institution on August 12th explicitly pointed out that two narratives that previously suppressed gold prices are being disproven: global liquidity has not truly entered a tightening cycle, and "de-dollarization" has not ended. The institution believes the gold bull market is not over, and the window for re-allocating after the previous correction has opened, recommending continued overweighting of gold. Analysts also pointed out that the central bank gold buying spree, the trend of de-dollarization, and the expectation of a decline in high US Treasury real interest rates constitute a "bottom-line support" for gold prices. Standard Chartered Bank expects gold prices to potentially move back towards the $5,000 mark. A survey of 16 professional analysts by the London Bullion Market Association (LBMA) shows that spot gold will trade around or above $4,500 per ounce by the end of 2026. The average price forecast for the year is $4,604 per ounce. Among them, the most bullish analyst, Julia Du of ICBC Standard Bank, expects gold prices to reach $7,150 per ounce this year. Of course, significant market divergence remains. The LBMA survey shows a forecast range as high as $3,700, with the most pessimistic target at only $3,450 per ounce. Analysts warn that if gold prices encounter resistance and fall back near $4,500 per ounce, the market is more likely to enter a range-bound trading pattern between $4,000 and $4,300. Technically, Bespoke Investment Group points out that gold prices have entered overbought territory, and historical data shows that gold prices have fallen on average over the following week, month, and three months after such a signal appears. The latest CFTC positioning data also shows that speculative net long positions in the gold market have risen to historically high levels, with long positions being highly concentrated.

Conclusion: The trajectory of gold prices pulled by three forces

Looking back from mid-August 2026, gold is in an unprecedentedly complex pricing environment. Moderate inflation data has weakened expectations of interest rate hikes, providing upward momentum for gold prices; the strong resistance level of $4,500 and profit-taking pressure constitute a short-term ceiling; the geopolitical stalemate in the Strait of Hormuz is affecting energy prices, inflation expectations, and the direction of Federal Reserve policy at a deeper level. In the short term, gold prices are likely to fluctuate repeatedly within the $4,300 to $4,500 range, with the battle between bulls and bears around the $4,500 mark continuing. In the medium to long term, structural factors such as continued global central bank gold purchases, the ongoing de-dollarization process, and limited upside potential for US Treasury real interest rates continue to provide solid bottom support for gold prices. As analysts have stated, current gold and silver prices are at a temporary bottom, and investors need to closely monitor three core variables: geopolitical situation, inflation data, and Federal Reserve policy. Today's trading day will see the release of the US July retail sales data, commonly known as the "terror data," which investors should pay close attention to, especially given the significant impact of Federal Reserve interest rate hike expectations on gold prices. (Spot gold daily chart, source: FX678) At 07:51 Beijing time, spot gold is currently trading at $4360.21 per ounce.