[Bullish for Precious Metals]
Global Gold ETFs See Record Net Inflows as Institutional Allocation Demand Returns Strongly
Global gold ETFs have experienced substantial capital inflows since August. As of August 25, SPDR Gold Trust holdings reached 1,048.35 tonnes, with cumulative additions exceeding 41 tonnes in August — the largest monthly increase since April 2022. SPDR Gold ETF alone attracted nearly $3.4 billion in a single week. Large institutional allocators such as pension funds are positioning gold as an inflation hedge and safe-haven proxy, and the return of investment-side demand has provided sustained buying support for gold prices.
U.S. Public Debt Surpasses $40 Trillion, Fueling Sovereign Credit Hedging Demand
The U.S. federal government's total outstanding public debt has officially crossed the $40 trillion mark, with concerns over fiscal sustainability continuing to mount. The rapid expansion of debt and persistent deficit pressure are gradually eroding the dollar's credibility, providing fundamental support for precious metals prices. Against a backdrop of elevated U.S. Treasury yields and eroding fiscal credibility, capital is increasing its allocation to precious metals as a sovereign credit hedge.
U.S. Dollar Index Generally Weak, Non-U.S. Monetary Tightening Expectations Provide Indirect Support
The U.S. Dollar Index traded in a range of 98.7–99.2 this week, significantly weaker than its earlier highs above 100, with a cumulative monthly decline of 2.39%. A weaker dollar directly improves the global allocation value of dollar-denominated gold, attracting off-exchange buyers and providing support to precious metals markets.
Central Bank Gold Purchases Accelerate; PBOC Monthly Addition Hits Cycle High
The global central bank gold-buying trend continues to strengthen, providing structural floor support for gold prices. Data from the People's Bank of China on August 7 showed that gold reserves reached 76.08 million ounces at the end of July, up 640,000 ounces (approximately 19.9 tonnes) month-on-month — the 21st consecutive month of increases and the highest monthly purchase volume since gold-buying resumed in November 2024, indicating an accelerating pace. Global central banks net-purchased 289 tonnes of gold in Q2 2026, up 62% year-on-year and the highest level for the same period on record. Sustained official-sector gold buying reinforces the reserve diversification logic for precious metals, materially constraining downside potential.
[Bearish for Precious Metals]
July PCE Data Neutral-to-Hot, September Rate Hike Expectations Edge Higher
The U.S. July PCE price index, released on August 26, rose 3.7% year-on-year, slightly above the market consensus of 3.6% and unchanged from the prior reading; it rose 0.2% month-on-month, above the expected 0.1%. Core PCE came in at 3.3% year-on-year and 0.2% month-on-month, both in line with expectations. The slightly hotter-than-expected headline PCE was primarily driven by services spending, indicating persistent inflation stickiness. With inflation failing to cool further, September rate hike expectations rose modestly following the data release.
Jackson Hole Symposium Approaches; Warsh's Debut Raises Policy Uncertainty
The Jackson Hole Economic Symposium will be held at month-end, where Warsh will deliver his first keynote address since taking office — the most important public statement ahead of the September FOMC meeting. With U.S. inflation still significantly above the 2% target, Warsh faces the challenge of balancing price pressures against economic growth, and the market is deeply divided over his policy stance. Pre-conference caution is pervasive, with longs actively reducing positions and precious metals volatility rising sharply.
U.S. Treasury Yields Range-Bound at Highs; Elevated Real Rates Continue to Pressure Valuations
Although the Treasury Department's expanded buyback operations have temporarily alleviated supply pressures, the 10-year U.S. Treasury yield remains range-bound at elevated levels of 4.64%–4.74%, while the 30-year yield briefly touched 5.34%, its highest since June 2007. With a large U.S. fiscal deficit, massive debt rollover pressures, and the Fed's ongoing balance sheet reduction, a trend decline in long-end yields appears unlikely. The elevated real-rate regime has not materially reversed, continuing to suppress valuations of non-yielding precious metals.
Gold's Sharp Short-Term Gains Raise Risks of Technical Correction and Profit-Taking
Spot gold has risen more than 12% cumulatively since August, surging from below $4,000/oz to near $4,700 — gains that are too large and too rapid in the short term. Gold accelerated its decline following the PCE data release, reflecting intensified long-short and profit-taking by some longs. The technical picture suggests overbought correction needs, and gold may face pullback pressure.
[Macro Summary]
Precious metals markets traded with high volatility this week. Spot gold broke through the $4,600/oz level early in the week, driven by the U.S. Treasury's expanded Treasury buybacks, escalating U.S.-Canada tariff tensions boosting safe-haven sentiment, ETF inflows, and dollar weakness, reaching an intraday high of $4,697. However, by week's end, gold retreated to around $4,590 amid the neutral-to-hot July PCE data and pre-Jackson Hole caution. The macro picture is mixed: temporarily eased U.S. Treasury supply pressures, escalating trade frictions, and returning institutional allocation demand provide support, while persistent inflation stickiness and rising policy uncertainty act as headwinds. Going forward, key focus areas include Warsh's Jackson Hole speech on August 28, the September FOMC meeting, the evolution of the U.S.-Canada tariff conflict, and developments in U.S.-Iran relations.
