Last week (July 20-24), the gold market experienced a weak rebound, with the fluctuating situation in the Middle East affecting the path of recovery. Market attention is now fixed on this week's Federal Reserve meeting, with low-range consolidation likely remaining the short-term theme.

In terms of market views, gold prices rebounded and then fell last week, forming an inverted V-shaped pattern overall. During the week, the possibility of a ceasefire between Iran and the US emerged, pushing gold prices up from their lows. However, strong employment data in the latter half of the week, coupled with Iran's rejection of the ceasefire agreement, caused oil prices to surge and gold prices to retreat again.

Gold's financial attributes shifted from a temporary easing of bearish pressures back to renewed pressure during the week. There was even a brief period of simultaneous gains in gold and oil, breaking through the recent downward channel. With net long positions in COMEX gold futures falling to the 10th percentile, and the 3-month implied volatility dropping back to early January levels, gold prices around the $4,000 mark have gained some recognition from market funds, leading to a technical rebound.

However, gold's medium-term performance still largely depends on financial investment demand. Even if the Middle East situation remains volatile, as long as US economic data does not show a continuous weakening, expectations for interest rate hikes will be difficult to cool significantly. The financial attributes of gold are likely to continue suppressing prices.

The short-term market focus has gradually shifted from geopolitical events to this week's Federal Reserve meeting and Chairman Walsh's policy stance. The market will reassess whether the future interest rate path sees any new changes. Before the meeting concludes, gold is expected to remain volatile with limited upside. If Walsh maintains a hawkish stance, gold could test support around $3,900 again. If he softens his previous hawkish tone and emphasizes that future policy will still depend on economic data, the market may adjust its excessive rate hike expectations, potentially leading to a recovery for gold.

Market Dynamics Last Week

Service sector PMIs in the US, Europe, and the UK rebounded in July. For manufacturing PMIs, July figures for the US and Japan each fell by 0.1 to 53.8 and 54.7, respectively, but remained in high-activity territory. The Eurozone and UK saw increases of 0.6 and 0.3 to 52.0 and 52.8, respectively, showing significant improvement. For service sector PMIs, aside from a slight decline in Japan, the US, Eurozone, and UK increased by 2.4, 2.2, and 3.0 to 53.6, 51.6, and 51.8, respectively, indicating a recovery in service sector expectations for Western developed countries.

The European Central Bank held its July meeting steady. The ECB kept its three key interest rates unchanged, including the deposit facility rate at 2.25%, in line with market expectations. The statement indicated that inflation fell to 2.8% in June. Although energy prices remain significantly higher than before the conflict, they are close to the baseline of the June staff projections. The assessment of growth risks leaning to the downside and inflation risks to the upside remains unchanged. The ECB continues to adhere to a data-dependent, meeting-by-meeting assessment approach without pre-committing to a path.

China's gold imports have risen rapidly. Chinese gold demand is clearly heating up. June gold imports reached 173 tons, hitting a new high since March 2024 and marking the third consecutive month of growth. The total imports for the first half of 2026 were approximately 820 tons, doubling year-on-year.

Risk Warning: Gold prices have been highly volatile recently. Investing in gold funds requires a full understanding of the risks and careful decision-making based on one's own risk tolerance. Investors should also continuously monitor the global macroeconomic outlook, global central bank gold purchases, and relevant policy developments.