Surge of 4% in a Single Day! Gold Is the "Brightest Asset" in the Overnight Market

Gold staged a powerful breakout in overnight trading, becoming the most dazzling asset across the board.

Overnight, spot gold hit an intraday high of $4,328.20 per ounce and closed at $4,308, representing a single-day gain of 4.20%, or an increase of $173.80, marking its largest single-day rise in five months. This move not only broke through the Descending Triangle consolidation pattern that had suppressed gold prices for over six weeks but also pushed prices above the 20-day and 50-day moving averages, fully lighting up bullish signals on the technical front.

This rally was driven by multiple catalysts. Trump's latest remarks regarding renewed negotiations on the Strait of Hormuz ignited market expectations for a geopolitical premium; meanwhile, second-quarter data on global central bank gold reserves showed expansion beyond expectations, with the Bank of Korea restarting gold purchases after 13 years being particularly noteworthy, further reinforcing market confidence in sustained central bank demand support. Notably, this sharp rise in gold prices coincided with a significant cooling in expectations for Federal Reserve rate hikes—the CME FedWatch tool shows the probability of holding rates steady in September has risen to 45%, the highest level in over a month.

Bullish momentum in gold is regrouping. The triple resonance of technical breakouts, central bank accumulation, and shifting macroeconomic expectations has brought the next key resistance level for gold prices, $4,400, into view.

Trump's Remarks Ignite Geopolitical Premium

The direct trigger for this round of gold price increases stems from Trump's latest comments on the Strait of Hormuz. According to Xinhua News Agency, Axios reported on the 4th, citing regional sources and U.S. officials, that the United States, Iran, and Oman are "close to reaching" a temporary agreement to reopen the Strait of Hormuz, with the U.S. side hoping to announce the deal on the 5th.

The report stated that Trump said Iran is actively negotiating to reopen the Strait of Hormuz. Under the proposed arrangement, Iran would manage vessels entering the strait via the northern route, while Oman would oversee vessels exiting via the southern route. An initial 60-day free transit period would be established, with the possibility of further extension.

These remarks are not without basis. Iranian officials have publicly stated that they are not negotiating directly with the United States but are consulting on opening the waterway through Oman, which has long served as a mediator between Washington and Tehran. The Strait of Hormuz carries approximately 20% of the world's seaborne oil traffic, accounting for about 15% of total global oil sales, meaning its status has a major impact on global energy markets.

The heating up of geopolitical narratives has provided short-term safe-haven premium support for gold and served as an important trigger for this breakout.

Central Bank Accumulation Hits Record Highs as South Korea Returns to Market After 13 Years

Beyond geopolitical factors, structural changes in central bank demand provide support with greater long-term significance to the bullish logic for gold in this rally.

According to data from the World Gold Council, global central banks purchased a total of 288.9 tons of gold in the second quarter, a 62% year-on-year increase, marking the strongest second-quarter performance on record. Poland made the largest purchase, acquiring 51 tons, raising its total reserves to a historic high of 632 tons, with a target of 700 tons. Adam Glapiński, Governor of the National Bank of Poland, was straightforward about the strategy: "We have been continuously buying gold, taking advantage of recent price pullbacks." China increased its holdings by 33 tons, continuing its long-term buying rhythm.

The most market-watchable development was the Bank of Korea restarting gold purchases after 13 years. Seoul stopped buying gold in 2013, coinciding with a sharp decline in gold prices, which placed immense pressure on the Bank of Korea due to significant paper losses, leading to the then-governor being summoned to the National Assembly for questioning. However, history has provided the answer—the 90 tons of gold South Korea bought at an average price of $1,629 per ounce are now worth approximately $11.8 billion, about $7 billion more than the original purchase cost.

The scale of the Bank of Korea's restart in gold buying is limited, planning to bid only for the 4 to 5 tons of annual gold output derived as a byproduct from domestic copper and zinc smelting, keeping reserve levels at approximately 104.4 tons. However, its symbolic significance far outweighs its actual volume—this marks economies that had long been absent from the gold market re-entering the arena. Jung Hee-sub, head of the reserve management department at the Bank of Korea, stated that the decision to buy gold was not based on specific price judgments but was made after comprehensive consideration of domestic and international gold prices and market conditions.

Cooling Rate Hike Expectations Confirm Bullish Technical Signals

In addition to the two main threads of geopolitics and central banks, marginal changes in Federal Reserve policy expectations also provided macroeconomic background support for this gold rally.

The CME FedWatch tool shows that market expectations for the Federal Reserve to hold rates steady in September have risen to 45%, representing the lowest expectation for rate hikes in over a month. The cooling of interest rate expectations has reduced the opportunity cost of holding gold, further opening up upside potential for gold prices.

On the technical front, this breakout is equally significant. Gold prices not only effectively broke through the Descending Triangle consolidation range that had been suppressing them since June 22 but also simultaneously moved above the 20-day and 50-day simple moving averages—the latter being effectively breached for the first time since March. Bloomberg strategist Cameron Crise pointed out that although gold surged more than 4% in a single day, according to its traditional driver model, gold prices "should have" declined slightly, implying that there is extra momentum in this rise beyond conventional explanations.

Looking ahead, the next target for bulls is near $4,400, a level that closely aligns with the historical turning point from November to December, and is also close to the 23% Fibonacci retracement level of the range from the historical high down to the recent low of approximately $4,020. If bullish momentum weakens, initial support levels for a pullback are sequentially the 50-day moving average at $4,243, the integer threshold of $4,200, and the downtrend line that has currently shifted from resistance to support around the $4,070 level.

Deutsche Bank analysts Michael Hsueh and Bryant Xu expect gold's year-end target price to be around $4,700, while JPMorgan, despite lowering its forecast, still sets the average price for the fourth quarter at $4,500. The World Gold Council maintains a more conservative stance in its mid-year outlook, believing that if there are no major changes in the macroeconomic environment, gold prices will remain volatile within a 5% range around $4,100. Analysts also caution that central bank gold buying plays more of a "floor-supporting" role rather than being the main force driving significant price increases—a truly sustainable bull market still depends on the large-scale return of retail investors and funds.