On Tuesday (August 25), spot gold traded in a high range, hitting an intraday peak of $4,696.55 per ounce—its highest level in three months since May 14—before pulling back near the $4,600 support level. The session closed at $4,658.67, up a marginal 0.13%. Beneath this candlestick pattern of an upper-shadow rejection, however, lie three underlying forces capable of reshaping global asset pricing dynamics. Bart Melek, Head of Global Commodity Strategy at TD Securities, noted: "This is merely a pause in the rally." A pause rather than an end—this assessment precisely captures gold's current delicate position. The metal encountered technical selling pressure as it approached the formidable $4,700 resistance, yet the macroeconomic drivers that have fueled its ascent over recent weeks remain intact and are, in fact, intensifying across multiple dimensions.

In early Asian trading on Wednesday (August 26), spot gold fluctuated narrowly, currently hovering around $4,657.28 per ounce. The technical logic behind the $4,700 threshold: Is this a healthy pullback or the conclusion of a trend? From a technical perspective, $4,700 has become a critical fortress that bulls must conquer. After touching an early high of $4,696.18, gold rapidly retreated, with the session low reaching approximately $4,605, producing an intraday range of nearly $100. This movement clearly indicates that as prices approach key resistance, short-term profit-taking and trapped positions have formed a synchronized selling pressure. Technical analysts point out that if gold can secure effective support around the $4,600 level, the next upside targets could be $4,755 or even $4,850. Conversely, a breach of the $4,600 mark could trigger a further decline toward the 200-day moving average near $4,519. Gold currently stands at a critical crossroads—a breakout would open upward space, while a pullback could lead to a period of consolidation. However, compared with mere technical corrections, what warrants closer attention is whether the fundamental logic driving gold's advance has undergone any fundamental shift. Based on current evidence, the answer is clearly no.

The geopolitical powder keg: Iran vows retaliation, clouds gather over the Strait of Hormuz. As the ultimate safe-haven asset, gold's price trajectory has never been detached from geopolitical pricing. The current Middle East situation continues to provide sustained risk premiums for the metal. The U.S. Treasury announced on Monday an expansion of sanctions against Iran, imposing new measures on 60 individuals, entities, and vessels. Iran responded swiftly and forcefully, condemning the new U.S. sanctions as "flagrantly illegal" and vowing retaliation. More alarming, Iranian state television over the weekend aired a segment discussing the assassination of Barron Trump, the 20-year-old son of U.S. President Donald Trump, claiming he is under surveillance and offering a $10 million bounty. Such unprecedented provocations have undoubtedly escalated U.S.-Iran tensions to new heights. Meanwhile, the situation in the Strait of Hormuz remains tense. The UK Maritime Trade Operations office reported that an oil tanker was struck by an unidentified projectile approximately nine nautical miles northeast of Al Ashkharah, Oman, losing power. Iran and Oman have indicated they are discussing plans to jointly supervise navigation safety in the Strait of Hormuz. Although oil prices fell for a second consecutive day on expectations that the sanctions' impact would be limited, traders remain highly vigilant about Iran's capacity to continue disrupting shipping. Notably, the United States has begun sending personnel back to some of its Middle East diplomatic missions that had previously been evacuated or downsized due to tensions with Iran. This move suggests Washington believes the risk of further escalation has diminished, but Iran's vow of retaliation means geopolitical uncertainty is far from resolved. For gold, as long as the Middle East powder keg continues to smolder, safe-haven demand will not easily fade.

The cracks in dollar credibility: When the Treasury begins "intervening" in the bond market. If geopolitics serves as gold's "accelerant," then the deep-seated changes in the dollar system are the "engine" driving this rally. Last week, U.S. Treasury Secretary Scott Bessent announced a significant decision—to at least double the quarterly pace of buying back longer-dated Treasuries. The immediate aim is to alleviate upward pressure on long-end yields, but markets have keenly captured the underlying signal: the U.S. government is directly intervening in the bond market to lower borrowing costs. Billionaire investor Stanley Druckenmiller issued a stern warning, stating that this move is eroding the credibility of the public debt market and missing a prime opportunity for substantive debt reform. Economists worry that the price of repressing yields through long-bond buybacks could be sustained dollar weakness. In fact, the dollar index fell following the announcement, dipping to levels near its lowest since mid-May. Citigroup has lowered its three-month dollar index forecast from 102.12 to 98.34, explicitly turning bearish on the greenback's short-term outlook. Market consensus holds that the Treasury's action signals a policy direction favoring dollar depreciation. A weaker dollar is, of course, one of the most direct catalysts for gold appreciation. At a deeper level, the Treasury's move has raised questions about whether the "strong dollar policy" is wavering. The World Gold Council notes: "Out-of-control U.S. debt and U.S. policy uncertainty are eroding trust in the dollar system. The global monetary system is gradually moving away from the traditional dollar-dominated order." In an era of eroding dollar credibility, gold's appeal as a non-sovereign monetary asset is systematically rising.

The inflation fog and monetary policy suspense: The dual test of PCE and Jackson Hole. The market's current focus is undoubtedly on Wednesday's release of the U.S. July personal consumption expenditures inflation report and Federal Reserve Chair Kevin Warsh's speech at the Jackson Hole symposium on Friday. The PCE data is critical because it serves as the Fed's official inflation gauge. Market expectations point to a 3.6% year-over-year increase in headline PCE for July, with core PCE holding steady at 3.3%. Any modest decline in core inflation would undermine the case for further Fed rate hikes. Notably, this month's weak producer price index and consumer price index readings have already significantly reduced the likelihood of near-term U.S. rate increases. The CME FedWatch tool shows traders currently pricing only a 38% probability of a September rate hike—down from around 55% just a month ago. The continued cooling of rate hike expectations is fundamentally eroding the dollar's yield advantage. Warsh's remarks at Jackson Hole could introduce even greater policy suspense. Warsh has long advocated for the Fed to play a more limited role in markets, including reducing forward guidance. Markets will closely watch whether he offers clues on the rate trajectory or comments on the Treasury's debt buyback program. If Warsh's speech further dampens rate hike expectations, the dollar could face renewed downward pressure, providing fresh upside momentum for gold. Goldman Sachs believes its previous forecast of $4,900 per ounce for gold by the end of 2026 carries significant upside risk—a judgment that appears increasingly credible in the current macroeconomic environment.

Structural support from Eastern demand. While Western investors focus on Fed policy, physical demand from the East is providing solid fundamental backing for gold. Latest data shows China's net gold imports via Hong Kong rose approximately 11% month-over-month in July. Concurrently, the People's Bank of China increased its gold holdings by 19.9 tonnes in July, marking the largest single-month accumulation since October 2023. Chinese gold prices have maintained a modest premium over London prices for six consecutive weeks, indicating robust domestic purchasing appetite. As the world's largest gold consumer and importer, China's demand dynamics exert outsized influence on the global gold market. Chinese investor and official sector allocation demand for gold is expected to remain strong, offering structural support from the East.

The Canada-U.S. trade war: An overlooked bullish factor for gold. While primary attention centers on the Middle East and the Fed, another confrontation unfolding on the North American continent also deserves gold investors' attention. Canada announced Tuesday the imposition of retaliatory tariffs on approximately $20 billion worth of U.S. imports, covering around 700 products, with rates of 15%, 25%, and 50%. This follows the U.S. imposition of new 50% tariffs on $20 billion in Canadian imports. Trump has also threatened to rename Lake Ontario, which spans the two countries' border, to "Lake America," and announced that from 2027, tariffs on all Canadian cars, trucks, auto parts, and steel would rise to 50%. This tit-for-tat trade war marks a new low in relations between these longtime allies. More notably, the Trump administration is discussing additional trade penalties against Canada. The continued escalation of global trade frictions will further amplify global economic uncertainty, thereby bolstering gold's safe-haven demand.

Conclusion: Gold's multi-faceted narrative is just beginning. From a geopolitical standpoint, U.S.-Iran confrontation continues to escalate, shipping security in the Strait of Hormuz faces threats, and safe-haven demand provides a floor under gold prices. From a monetary system perspective, the Treasury's bond market intervention is eroding dollar credibility, with dollar weakness offering upward thrust for gold. From a monetary policy angle, softening inflation data is undermining rate hike expectations, and the room for lower real rates opens a valuation channel for gold, a non-yielding asset. From a physical demand perspective, Eastern forces, led by China, are persistently accumulating gold, offering solid fundamental market support. The $4,700 level may represent short-term resistance, but given the confluence of these multiple forces, a breakout may only be a matter of time. As TD Securities suggests, the current pullback is more a technical momentum fade than a trend reversal. When dollar credibility shows cracks, geopolitical risk premiums persist, and global central banks compete to accumulate gold, gold's bullish narrative may be just turning a new page. For investors, rather than fixating on whether $4,700 can be conquered in one move, a more fundamental question deserves consideration: In the current macroeconomic environment, has gold's safe-haven value and asset allocation worth already been fully priced in by the market? The answer is likely no. This week's PCE data and Warsh's speech will provide crucial clues for judging whether this trend can persist. Regardless of how the data plays out, gold has already recalibrated itself at a higher price coordinate above $4,660.