Gold settled at its highest level in two months on Wednesday, extending a rally of more than 9% in two weeks as soft jobs and inflation data cooled bets on a September Fed rate hike. ETF inflows are returning after months of outflows, even as long-term Treasury yields stay elevated.
Gold's most-active futures contract settled at $4,467.50 per ounce on Wednesday after topping $4,500 earlier in the session. That settlement was gold's highest since June 4, according to FactSet data.
The metal has climbed more than 9% over the past two weeks, breaking out of a tight range near $4,000 that held for nearly two months. Investors who waited through that stretch are now chasing the move, reviving memories of gold's run to an all-time high above $5,500 an ounce in January.
ETF inflows return after months of outflows
The SPDR Gold Shares ETF, the largest U.S.-listed gold-backed fund, pulled in $284 million in net inflows in July — its first month of positive flows since March. The fund has since taken in more than $2 billion in the first two weeks of August, FactSet data show.
Miner-focused funds followed the same pattern. The VanEck Gold Miners ETF and the VanEck Junior Gold Miners ETF also logged their first net inflows since at least March in July.
Fading rate-hike bets pressure the dollar
Traders priced just a 37% chance of a Fed rate hike next month, down from over 70% in recent weeks, according to Fed-funds futures. Rate-hike expectations for 2026 have also shifted, from as many as two hikes by year-end to just one in December, per the CME FedWatch Tool.
Aakash Doshi, head of global gold and metals strategy at State Street Investment Management, said the move has been driven mostly by Fed expectations and a weakening dollar. According to MarketWatch, Doshi said: "I think gold has already absorbed that." Those shifting expectations have pushed the ICE U.S. Dollar Index down 1.2% over the past two months, near its lowest level since mid-June.
Rising yields haven't derailed the rally
The rebound is notable because it has come despite elevated real yields, which have weighed on gold for most of the year. The 10-year Treasury yield hovered near 4.7% this week, close to its highest level in nearly 19 months, while the 30-year yield traded as high as 5.28% two weeks ago — its highest since the summer of 2007.
Stephen Innes, managing partner at SPI Asset Management, said that if yields are rising because of heavy debt supply and persistent inflation uncertainty, gold reads that as a hedge signal rather than a headwind. Doshi's team at State Street sees gold climbing back toward $5,000 an ounce by year-end, citing seasonal strength, a rebound in Western and central-bank demand, and record seasonal China retail demand in Q2.
Source: MarketWatch
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