Non-farm payrolls "ignite" gold, central bank gold purchases "extend life": Can the rebound evolve into a second bull market? The market awaits Waller to reveal his hand at Jackson Hole.

The gold market in 2026 is a rigorous test of traders' psychological resilience. From skyrocketing to a decade high of over $5,300 per ounce at the beginning of the year, gold plummeted by 18% to around $4,000, only to surge violently by over 9% in the last two weeks, reclaiming levels above $4,400. Within just six months, gold completed a dramatic reversal from "faith collapse" to "return of the king." Last week, gold marked its best weekly performance since January, while gold mining stocks recorded their strongest five-day surge since 2008. Behind this seemingly robust rebound, bulls and bears are engaged in an intense standoff around the Federal Reserve's policy path, geopolitical risks, and global central bank gold purchases. From "rate hike panic" to "weak employment shock": a rebound ignited by non-farm data In the first half of 2026, gold underwent a ferocious valuation reconfiguration. Against the backdrop of U.S.-Iran conflicts driving up oil prices and persistent hawkish expectations from the Federal Reserve, international gold prices swiftly retreated from the historical peak of $5,405 per ounce at the end of January, suffering a maximum drawdown exceeding 30% within six months. By late June, gold prices briefly hit an intra-year low of $3,970 per ounce. However, entering August, the market narrative underwent a fundamental shift. The catalyst for this round of gold's rebound was a "disappointing" employment report released by the U.S. Department of Labor on August 7. The data indicated a decrease of 23,000 in U.S. non-farm employment in July, while the market had anticipated an increase of 80,000; concurrently, revisions for May and June data were substantially downward, totaling a correction of 103,000. The subsequent July CPI data further corroborated the easing of inflationary pressures. The U.S. CPI rose 0.1% month-on-month and 3.4% year-on-year in July, while core CPI increased 0.2% month-on-month and 2.5% year-on-year, all in line with market expectations. The steady inflation performance, coupled with signs of weakness in the labor market, painted a picture of "economic slowdown, inflation manageable." This report completely overturned market expectations for Federal Reserve policy. The CME FedWatch tool showed the probability of a 25 basis point rate hike by the Fed in September plummeted from approximately 68% to 40%. Federal Funds futures traders have priced a 45% chance for a rate hike in October, down from over 70% just weeks ago. "This is not a rate cut trade, at least not yet," noted Patrick Kennedy, founder of AllSource Investment Management. "The change is that the tail risk of rate hikes has vanished from the market." The Fed is expected to maintain interest rates between 3.50% and 3.75% for the year, with September being seen as a potential rate hike opportunity until the employment data came in below expectations. Aakash Doshi, global head of gold and metal strategies at State Street Global Advisors, stated, "The price movement in gold over the past three to four weeks has primarily been driven by expectations regarding the Fed and a weaker dollar." He further analyzed that although Fed Chairman Waller made hawkish comments during the July FOMC meeting, he did not commit to a rate hike in September"the market clearly interpreted this as a sign of not rushing to tighten policy." As a result, the dollar index fell to multi-month lows, down a cumulative 1.2% over the past two months. According to the view of Soochow's chief economist Lu Zhe and team, gold has entered a right-hand trend, with expectations that it will repair to $4,700 to $5,000 per ounce around the September FOMC meeting. The team noted that the decline in real interest rates has provided quantifiable upside potential, while credit risks associated with the dollar could further enhance upward elasticity. Central Bank Gold Purchases: A "super buy" of 289 tons constructing a structural bottom If the cooling of rate hike expectations is the "trigger" for gold's rebound, then the continuous purchases by global central banks serve as the "ballast stone" for gold's long-term rise. The World Gold Council's latest report shows that in the second quarter of 2026, global central banks and other official institutions collectively added 289 tons of gold reserves, an increase of 62% year-on-year and a staggering 411% increase compared to the first quarter, marking the highest quarterly gold purchase volume in nearly four years. In the first half of the year, global gold demand reached 2,522 tons, a 2% year-on-year increase, with the total demand value reaching a historic high of $380 billion. What is even more noteworthy is that China's central bank has increased its gold reserves for 21 consecutive months, adding 640,000 ounces (approximately 19.9 tons) in July. Central banks of countries like Poland, Uzbekistan, Kazakhstan, and Singapore also joined the ranks of gold buyers in the second quarter. Previous research by the World Gold Council indicated that 45% of surveyed central banks expect to increase their gold reserves within the next year. Pippa Malmgren, a former special assistant to President George W. Bush and a member of the National Economic Council, stated that the factors attracting investors to gold remain unchanged. Many are concerned that U.S. fiscal spending will spiral out of control and believe that economic growth in other regions will be sluggish, "which implies inflation." She added that the Trump administration's costly overseas wars and its embrace of cryptocurrencies have exacerbated unease among some investors. Malmgren pointed out that this has led anxious investors to turn to conservative value preservation methods, such as buying gold, while major central banks around the world continue to enhance their gold reserves. She asserted that this further indicates a decline in confidence in fiat currency, with China's continued gold purchases intensifying this trend. Heraeus's latest report noted that gold currently has two layers of support: short-term is driven by monetary policy expectations (real interest rates, the dollar, Fed policy), while long-term support comes from more persistent structural demandcentral banks de-dollarizing, geopolitical risks, and the diversification of sovereign asset allocations. "The former determines the speed of price increases, while the latter determines whether gold retains its ability to rally following significant corrections." Gold Mining Stocks: The strongest week since 2008, an extreme release of leverage Gold's rebound has been magnified in mining stocks. In the first week of August, the VanEck Gold Miners ETF (GDX) registered a cumulative increase of 21.09% over five trading days, its best weekly performance since December 2008; the GDXJ ETF, focused on small- and mid-cap miners, surged by 22.42%. Large producers also performed strongly: Agnico Eagle Mines rose by 22.92% over the week, Newmont jumped by 20.55%, and Barrick Gold rose by 19.22%. Smaller mining companies saw even greater increases, reflecting the stronger profit leverage high-cost, smaller producers have when gold prices risewhen gold prices go up, costs for labor, energy, and mining do not rise in tandem, making each dollar increase in gold prices more impactful on corporate profits and valuations. Independent trader Vince Stanzione noted that some traders and investors have turned to gold mining stock trading in search of value within the stock market. Many large gold mining stocks (like Newmont) currently have forward price-to-earnings ratios in the single digits and offer generous dividends. With gold prices climbing while mining costs (like energy) remain relatively stable, mining companies profit margins expand much faster than gold prices themselves. However, analysts warn that mining stocks should be treated as "support amplifiers" within a portfolio, not as absolute core holdings. Billionaire hedge fund manager and "God of Short Selling" John Paulson stated in an interview that he believes gold is in the early stages of a long-term bull market, and as confidence in fiat currency diminishes, the demand for gold as an alternative will continue to rise. Paulson particularly pointed out that the best investment approach currently is to invest in early-stage mining stocks that possess significant undeveloped reserves. Money Flow: GLD attracts over $2 billion in two weeks, with a surge in bullish option buying The shift in capital also corroborates the fundamental change in market sentiment. SPDR Gold Shares (GLD)the largest physical gold ETF in the U.S.recorded a net inflow of $284 million in July, marking the first monthly net inflow since March. As August rolled in, the inflow of funds accelerated further: over $2 billion in net inflows was attracted in the first two weeks. On August 11 alone, GLD recorded total inflows of $637 million, the largest single-day inflow since June 18, with retail investor inflows reaching $50 million, the strongest single-day retail buying since March. Cumulatively, GLD has surpassed $1.4 billion in inflows since August, poised for its first monthly net inflow since February. According to Shawn Young, chief analyst at cryptocurrency trading platform MEXC Research, retail investors have various options for bullish exposure to gold. Young stated that precious metal ETFs like GLD and iShares Gold Trust (IAU) are the most direct ways to express a bullish view on gold. Signals from the options market are even more aggressive. Data from SpotGamma revealed that last Friday, the buying volume of GLD call options approached $100 million, while put option purchases amounted to only about $25 million. GDX call options bought exceeded $80 million, with put options just slightly above $9 million. GDX's trading volume reached about four times its usual trading volume. Suki Cooper, global head of commodity research at Standard Chartered Bank, stated that the demand for central bank gold purchases, geopolitical uncertainty, and the need for diversified asset allocation remain strong, leading gold prices to likely venture back toward the $5,000 per ounce mark. UBS Wealth Management's investment director office also anticipates that with U.S. yields trending downward, the dollar further weakening, and central banks continuing to buy gold, prices are expected to reach $5,000 in the first half of next year. Joe Cavatoni, senior market strategist at the World Gold Council (WGC), pointed out that unlike previous gold rushes driven purely by war-related panic, this round of U.S. capital's rebound is more heavily influenced by macro-strategic considerations. Cavatoni stated, "I do not think gold is merely a safe-haven asset. Many investors use it as a wealth preservation tool, assisting in diversifying portfolios in the face of persistent uncertainty in economic policies." Forward risks: The "triple test" of real interest rates, Jackson Hole, and geopolitics However, the road to rising gold prices is anything but smooth. Despite the cooling nominal interest rate hike expectations, real interest rates remain highthe yield on the 10-year U.S. Treasury hovered around 4.7% at the beginning of this week, close to a 19-month high. The high real interest rates have been the biggest headwind suppressing gold this year. The upcoming Jackson Hole Global Central Bank Annual Meeting at the end of August will be the next critical juncture. The market anticipates that Waller may outline the mid-term policy framework during this event. The Soochow team posits that in the lead-up to the August and September FOMC meetings, gold prices may experience a relatively smooth upward trend, with new catalytic points likely coming from the non-farm and CPI data being released during this period and the global central bank meeting. The market is not only trading interest rate expectations but also adapting to the policy style of the new Federal Reserve Chairman Kevin Waller. Eugenia Mykuliak, executive director of the B2Prime Group, noted that Waller's cautious and often vague statements have exacerbated market anxiety regarding central bank policies. On the geopolitical front, there remains divergence in the progress of U.S.-Iran negotiations. Should the Strait of Hormuz reopen and oil prices decline further, easing inflationary pressures may further diminish the Fed's rate hike motivation; however, if the geopolitical situation escalates again, safe-haven sentiments would push gold prices higher once more. The warning from NYU emeritus professor Gary Marcus may hold the most cautionary significance: "A vast amount of funding is being funneled into AI projects, yet uncontrolled AI has already emerged, and there are currently no effective control measures."When the market simultaneously feels uncertainty about central bank policies, geopolitical tensions, and new technological risks, the logic of flowing capital from risk assets into gold will continually reinforce itself.