On July 26, 2026, the international gold market witnessed a historic moment. Spot gold in London broke through the $2,800/oz mark during Asian trading hours, reaching a high of $2,815.42, a new record. The main gold futures contract on the COMEX climbed above $2,820, with safe-haven sentiment and capital inflows pushing gold prices up over 25% year-to-date.
Key Drivers
Fed Policy Shift Expectations Rise
The Fed's July meeting minutes released last week showed that several members believed the labor market continued to cool and inflation was making progress toward the 2% target, providing grounds for early rate cuts. Market expectations for a September rate cut rose to 78%, the dollar index fell to a three-month low of 102.3, and falling real interest rates directly supported gold valuations. Goldman Sachs analysts noted that if rate cuts materialize, gold prices could challenge the $3,000 mark.
Geopolitical Risks Escalate
Recent tensions in the Middle East have intensified, with clashes between Israel and Hezbollah escalating and Houthi attacks on Red Sea commercial ships raising supply chain concerns. In addition, Ukraine launched a counteroffensive in the Zaporizhzhia region, and Russia announced partial military mobilization. Geopolitical uncertainty prompted investors to flood into gold ETFs. The world's largest gold ETF, SPDR Gold Trust, saw its holdings increase by 12.6 tons this week to 985.3 tons, the highest since April 2024.
Central Bank Buying Continues
Data from the World Gold Council shows that global central banks purchased a net 483 tons of gold in the first half of 2026, up 15% year-on-year. The People's Bank of China increased its gold reserves for the 13th consecutive month, with the latest data showing reserves reached 2,340 tons. Central banks in China, Poland, and Turkey have been major buyers. The de-dollarization trend and demand for diversified foreign exchange reserves provide a solid floor for gold prices.
Market Sentiment and Institutional Views
Based on real-time data, the 29-day relative strength index for gold is 62.6, indicating strong bullish momentum but not yet overbought. The upper Bollinger Band near $2,850 forms short-term resistance, while moving averages show a standard bullish alignment. Traders noted that stop-loss orders were triggered after the $2,800 breakout, accelerating the rally, with daily trading volume 40% above the 30-day average.
Multiple institutions have raised their gold price forecasts. Citigroup raised its year-end 2026 target from $2,700 to $2,950, while UBS set a $3,000 target. Its head of commodities said, "Gold's monetary attributes are returning. Central bank reserve diversification and private investors hedging currency depreciation risks will drive gold into a long-term upward cycle." However, JPMorgan warned that a rapid rally above $2,900 could trigger a short-term correction.
Outlook and Risk Factors
Analysts generally believe gold is in a strong phase of fundamental and sentiment resonance, but attention should be paid to the following aspects:
- U.S. Economic Data: If the July nonfarm payrolls and CPI data released next week surprise to the upside, it could dampen rate cut expectations and trigger a gold pullback.
- China Demand Shifts: Domestic gold consumption has cooled due to high prices, but investment demand remains robust, with Shanghai Gold Exchange AU9999 trading volume staying elevated.
- Key Technical Levels: Support lies at $2,750 (previous high), while resistance at the $2,900 psychological level.
Overall, against the backdrop of an impending rate cut cycle, sustained geopolitical risks, and official gold purchases, the gold bull market remains intact. Investors should stay flexible and look for opportunities on pullbacks.
Data sources: World Gold Council, Federal Reserve, CME FedWatch, Sina Finance. Data as of 16:30 Beijing time on July 26, 2026.
