Geopolitical developments and weaker-than-expected economic data are driving a rebound in precious metals prices. In the Middle East, Iran's Foreign Ministry spokesperson Baghaei stated that Iran and Oman have reached an agreement on shipping routes through the Strait of Hormuz. A joint declaration is in its final review and drafting stages, provided there is no third-party interference. However, Baghaei emphasized that this agreement does not imply the Strait of Hormuz will be fully safe for navigation. Sources indicate that the proposal to reopen the strait would not impose tolls or service fees on vessels transiting the waterway.

On the economic front, US private sector job growth in July fell significantly short of expectations, suggesting a cooling in labor market momentum. Despite this, wage growth remains resilient, and the overall employment situation is stable. Data shows that ADP employment increased by just 44,000 in July, far below the market consensus of 70,000 and marking the lowest level this year. Wages for job changers rose 7% year-over-year, the fastest pace in nearly a year, while pay for those staying in their roles held steady at 4.4%. All eyes are now on the US nonfarm payrolls report for July, due for release on Friday.

In futures trading, on August 5, 2026, the main Shanghai Gold (Au2610) contract opened at 887.52 yuan per gram and closed at 910.40 yuan per gram, up 2.70% from the previous day's close. Volume reached 41,087 lots, with open interest at 129,725 lots. During the night session, the contract opened at 913.00 yuan per gram and settled at 928.10 yuan per gram, a gain of 1.94% from the afternoon close. Similarly, the main Shanghai Silver (Ag2610) contract opened at 14,600.00 yuan per kilogram and closed at 15,105.00 yuan per kilogram, up 5.09%. Volume was 709,794 lots, with open interest at 315,309 lots. The night session saw silver open at 15,027 yuan per kilogram and close at 15,260 yuan per kilogram, rising 1.03% from the afternoon close.

Monitoring US Treasury yields, the 10-year note yield closed at 4.63% on August 5, 2026, a decrease of 0.07% from the prior session. The spread between the 10-year and 2-year yields stood at 0.43%, narrowing by 0.02%. In terms of position changes on the Shanghai Futures Exchange (SHFE), the Au2610 contract saw long positions decrease by 594 lots and short positions fall by 3 lots from the previous day. Total volume for all gold contracts was 359,990 lots, a surge of 80.59% from the prior session. For silver, the Ag2610 contract recorded a drop of 2,936 lots in long positions and 744 lots in short positions. Total silver contract volume reached 972,292 lots, up 9.18%.

Tracking precious metals ETFs, gold ETF holdings increased by 3.43 tonnes to 1,009.30 tonnes, while silver ETF holdings remained unchanged at 14,939 tonnes. In terms of arbitrage, the domestic gold premium stood at -11.22 yuan per gram, and the domestic silver premium was -254.58 yuan per kilogram. The gold-to-silver price ratio on the SHFE was approximately 60.27, down 2.28% from the previous day, while the overseas ratio was 68.88, a decrease of 1.31%.

On the Shanghai Gold Exchange, trading on August 5 saw gold volume reach 56,250 kilograms, up 181.67% from the prior session, and silver volume hit 327,718 kilograms, an increase of 32.69%. Gold delivery amounted to 11,872 kilograms, while silver delivery was 13,200 kilograms.

Regarding strategy, the outlook for gold is cautiously bullish. Signs of geopolitical de-escalation, coupled with disappointing employment data, are leading the market to revise its previously cautious expectations regarding future Fed monetary policy. As a result, gold prices are expected to maintain a volatile but strengthening trend, with the Au2610 contract likely trading in a range of 900 yuan/gram to 950 yuan/gram. Attention should remain on Friday's US nonfarm payrolls data.

For silver, the outlook is also cautiously bullish, as it shares similar logic with gold. Prices are expected to remain in a volatile but strengthening pattern. The Ag2610 contract is forecast to trade within a range of 14,800 yuan/kilogram to 15,800 yuan/kilogram. Focus will remain on the Friday employment report.

As for arbitrage and options strategies, a wait-and-see approach is recommended. Risks include overseas liquidity concerns and the continued withdrawal of speculative positions.