Spot gold experienced a sharp reversal during Tuesday's trading session, suddenly plunging through the $4,400 per ounce level after initially rising. The precious metal dropped 0.74% on the day to last trade at $4,375.38 per ounce. Spot silver also declined by approximately 1%, settling at $64.668 per ounce.

This price action followed the release of US July inflation data, which came in broadly in line with market expectations. The headline Consumer Price Index (CPI) eased from 3.5% to 3.4%, while the core CPI fell from 2.6% to 2.5%. The absence of a major surprise in the subdued inflation figures alleviated pressure on the Federal Reserve to accelerate its pace of interest rate hikes. However, the lack of a decisive directional signal from the data has left the gold market in a tug-of-war between buyers and sellers. After the data release, gold prices initially dipped before recovering, but ultimately failed to hold the $4,400 threshold.

According to a research report from CICC, two prevailing narratives that had previously weighed on gold are now being disproven: global liquidity has not truly entered a tightening cycle, nor has the process of "de-dollarization" concluded. Global central banks purchased 289 tonnes of gold in the second quarter, a 62% year-on-year increase, reflecting deep-seated concerns about the US dollar among central banks worldwide.

Shenyin Wanguo Futures noted that from a medium-to-long-term perspective, a rising global geopolitical risk profile, escalating US fiscal pressures, and the ongoing de-dollarization process are all collectively supporting central banks' continued accumulation of gold reserves. The People's Bank of China, in particular, has now increased its gold reserves for 20 consecutive months, highlighting the metal's value as a safe-haven asset in an uncertain environment.