#夏日创作营 Gold prices may bottom in the third quarter and rebound in the fourth quarter

Looking ahead to the second half of the year, under the combined effects of rising US Treasury real yields, weak physical gold demand, the fading of geopolitical risk premia, and other factors, it is expected that gold prices will show a pattern of falling first and then rising: in the third quarter, gold prices are likely to continue a choppy downward trend. The international gold price’s annual low may test the $3,700/oz area, but in the fourth quarter, a rebound from the low level is likely.

In terms of monetary attributes, elevated US Treasury real yields have led to redemptions from gold ETFs (exchange-traded funds), which has pressured gold performance. However, this may ease in the fourth quarter. In most historical periods, gold prices have shown a strong negative correlation with medium- to long-term US Treasury real yields. US economic data in the second quarter overall reflected strong resilience. Tightening immigration policy slowed labor supply growth, helping stabilize the labor market. Meanwhile, AI (artificial intelligence) technological progress not only boosted investment, but also largely contributed to improvements in total factor productivity.

On inflation, US CPI and core CPI remain high. At the June Federal Reserve meeting, the Fed raised its full-year forecasts for personal consumption expenditures (PCE) and core PCE to 3.6% and 3.3%, respectively—well above the 2% policy target. Against a backdrop of sufficient economic resilience and still-strong inflation pressure, expectations that the Fed will hike rates 1 to 2 more times in the second half have been building. This has not only pushed up short-end US Treasury yields, but has also kept medium- to long-term tenors—such as 10-year US Treasury real yields—rising to above 2.3%, the highest level in nearly two years. As a result, the cost-effectiveness of holding non–yield-bearing gold declines significantly.

From a capital-flow perspective, as AI-driven technological innovation raises US real rates, global cross-border capital has continued to flow back into the US. During March to May 2026, global gold ETFs have seen sustained large-scale redemptions, while technology-sector ETFs recorded the largest monthly inflow in nearly two years in May. This indicates a rebalancing of flows between gold and technology.

Real rates in the US are expected to remain elevated in the third quarter, weakening demand for gold investment and suppressing gold price performance. But in the fourth quarter, as commodity prices such as crude oil fall back, US inflation pressure should ease somewhat. The Fed’s rate path may shift to a more dovish stance, providing support for gold prices.

In terms of physical attributes, marginal declines in central bank gold buying combined with weak demand for gold jewelry are shrinking the stabilizing force behind physical demand. Over the past three years, sustained large-scale central bank gold purchases provided steady bottom support for gold prices, but since 2026 this momentum has weakened at the margin. In particular, some emerging-market central banks—such as Turkey and Azerbaijan—have shown net sell-offs. Based on monthly data, it is expected that in the second quarter of 2026, central banks’ net gold purchases will decline compared with the prior two years; full-year net gold purchases are also expected to fall. The author believes this may be because some central banks have already completed their targets for diversifying reserves. In addition, under an imported inflation backdrop, they may need to sell gold to defend their currency exchange rates, so the official bid’s bottom-support power in the second half may be weaker than in 2023–2025. Moreover, with gold prices high, alternative products such as platinum divert demand for gold jewelry. In combination with India raising gold import tariffs in May, the probability of weaker gold jewelry demand in the second half is relatively high.

In terms of safe-haven attributes, as risk premia fade amid geopolitical and trade uncertainties, gold’s hedging value diminishes. Negotiations between Russia and Ukraine have continued to progress, and the US and Iran have reached shipping-safety consensus. Risks to crude oil transport through the Strait of Hormuz are expected to ease. With global geopolitical conflicts broadly entering a long-term stalemate steady state, conflict news can only trigger small day-to-day pulse-like rebounds in gold prices and cannot generate a panic-driven surge. At the same time, as the US Supreme Court ruled unconstitutional the measures related to Trump’s tariffs, tariff risk has clearly eased. With overall stability in global financial markets improving, gold’s hedging value against financial collapse and credit crises currently lacks scenarios for meaningful application, and institutions have reduced the proportion of preventive gold allocations.

It is worth noting that in the second half of the year, the US will face midterm elections, and global geopolitical conflicts may persist. If political or geopolitical tensions arise, gold prices may still experience episodic rebounds. $XAUUSD ‌