Gold’s Triple Engine Back to 4400: Payrolls, Hormuz and Central Bank Buying—Tonight’s CPI Decides Everything
How long did it take gold to fall from 5600 to below 4000?
Six months.
How long did it take to rise from 4000 back to 4400?
Two weeks.
On August 11, COMEX gold futures settled at $4448.6 per ounce, up more than 8% month to date. Spot silver also strengthened, with COMEX silver settling at $65.88 per ounce, up 3.75%.
And how do those who cut their losses below 4000 feel now?
So what exactly is supporting this surge?
Three engines, each stronger than the last.
Engine One: Weak Employment—The Fed’s “Brake”
On August 7, the U.S. Bureau of Labor Statistics released the July nonfarm payrolls data—employment fell by 23k.
What was the market expecting? An increase of 80k.
That’s a gap of 100k jobs. The deviation was approximately five standard deviations, far beyond the usual range of forecast errors.
Even more severely, the May and June figures were revised down by a combined 103k.
What does that mean?
We previously thought the labor market was holding up. Now we’re being told—the previous data was wrong, and the real situation is worse than imagined.
Wage growth also collapsed. Average hourly earnings rose just 0.1% month on month in July, below the expected 0.3%.
Once the data was released, traders quickly reduced their bets on Fed rate hikes.
Cooling rate-hike expectations = pressure on the dollar = gold takes off
Engine Two: Geopolitical Standoff—Hormuz’s “Final Step” Blocked
On August 8, Zolqadr, secretary of Iran’s Supreme National Security Council, officially stated:
The conditions for reopening the Strait of Hormuz—the United States must meet five requirements:
Permanently end military operations against Iran and its regional allies. Lift the maritime blockade and all sanctions against Iran. Withdraw U.S. forces from the region. Return Iran’s frozen assets. Compensate for war losses.
Will the United States agree?
Not a chance.
Iranian President Pezeshkian said that “now is the best time to reach an agreement with the United States”—but only if the United States “fully accepts Iran’s conditions.”
U.S. Vice President Vance’s response was more direct: “We are now in the middle of this game.”
The middle. Not the end. Not close to a deal.
It is still being fought.
And another front has not been idle either.
On August 9, Yemen’s Houthi forces announced that they had carried out a “precision strike” using drones against an Aramco refinery in Jizan, Saudi Arabia, claiming they had “successfully hit the target.”
This was another direct attack on Saudi oil facilities by the Houthis since they announced a “maritime blockade” of Saudi Arabia in late July.
One Strait of Hormuz is holding up a quarter of the world’s crude oil supply.
The Houthis continue setting fires in the Red Sea and on Saudi Arabia’s doorstep.
Geopolitical risk premiums are not burning oil—they are burning investors’ nerves.
Engine Three: Central Bank Gold Buying—The Simplest “Buy, Buy, Buy”
Gold rises, and central banks are buying.
Gold falls, and central banks are still buying.
The People’s Bank of China: 21 consecutive months of increasing its gold holdings.
As of the end of July, gold reserves stood at 76.08 million ounces, an increase of 640k ounces from the end of June—the scale of purchases expanded for five consecutive months. July’s purchases totaled nearly 20 tons, the largest monthly increase since gold buying resumed in November 2024.
Global central banks: Net gold purchases totaled 289 tons in the second quarter, up 62% year on year and reaching a record high for any second quarter.
Why?
Because 89% of central banks expect official global gold reserves to increase further over the next 12 months.
Because 90% of central banks list “gold’s performance during crises” as their primary reason for holding it.
When you are panicking, central banks are sweeping up.
When you are cutting your losses, they are hoarding positions.
All right, that concludes the three engines.
But tonight is the real quality-control test.
At 20:30 Beijing time tonight, the U.S. July CPI will be released.
Market expectations: Headline CPI up 0.1% month on month and 3.4% year on year; core CPI falling from 2.6% to 2.5% year on year.
If the data is mild—gold could challenge 4500.
If the data is stronger than expected—rate-hike expectations could reignite, and a technical pullback could be triggered at any time.
Payrolls gave gold its first push. Geopolitics gave it the second. Central bank buying gave it the third.
Tonight’s CPI will determine whether the market steps on the gas or the brakes.
It took gold six months to fall from 5600 to below 4000, but only two weeks to return from 4000 to 4400.
Those who cut their losses below 4000 did not get a lower price.
They got a 10% gain in two weeks.
Tonight’s CPI is the “quality-control report” for this rebound.
Pass the test, and 4500 is next.
Fail it, and don’t panic—the central banks are still buying, geopolitical tensions have not stopped, and weak employment has not reversed.
With three engines, if one stalls, two remain.
But if you are still hesitating now—
By the time you figure it out, gold may no longer be at 4400.
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