UBS: Gold Gains as Fed Uncertainty and Investor Demand Improve - FJElite

Gold has risen as investors reassess the outlook for US monetary policy and the dollar. Recent Fed communication has left the near-term rate path uncertain, while softer US labour-market data have reinforced expectations that rates could remain unchanged if inflation stays contained.

ETF inflows have resumed, first from China and more recently Europe, while central-bank demand remains solid. Central banks bought a net 51 tonnes in June, and the PBoC increased its gold reserves by 20 tonnes in July, the largest monthly increase since October 2023.

For gold to extend the rally, three conditions would help: continued dollar weakness, lower expected US real rates, and stronger investor demand. ETF flows are improving but are not yet clearly sustained. Around 500 tonnes of investment demand per quarter may be needed for gold to trade more sustainably at or above $5,000 an ounce.