What Drove Gold to a Fourth Consecutive Weekly Gain Above $4,380?

Cooling Inflation

July CPI cooled for a second straight month to 3.4% year-over-year, exactly in line with consensus . The print reinforced the view that inflation was no longer forcing the Fed's hand. By August 12, gold had risen above its 100-day moving average—a key technical level—as traders priced in a "no hike" September .

Retail Sales Slump

July retail sales also disappointed, further weakening the case for monetary tightening . The trifecta of soft jobs, inflation, and consumer spending left the Fed with little room to move.

Fed Rate Expectations Pivot: The Mechanism

Until late July, markets had been pricing in a September rate hike. The weak jobs data dashed those expectations and shifted market bets toward the Fed holding steady or potentially cutting . Lower rate expectations reduce the opportunity cost of holding non-yielding gold, making bullion more attractive .

By mid-August, the probability of a 25-basis-point September hike had fallen to roughly 40%, down from near 50% earlier in the week . Gold responded by breaking above technical resistance and holding above $4,370.

US Dollar Weakness: The Amplifier

The dollar fell broadly as soft economic data and reduced rate-hike bets eroded its yield advantage . The US Dollar Index (DXY) dropped to 99.57, down 0.4%, as investors trimmed Fed tightening expectations . Because gold is priced in dollars, a weaker greenback makes bullion cheaper for holders of other currencies, boosting global demand.

Strait of Hormuz Tensions: The Geopolitical Wildcard

In early August, hopes of a partial US-Iran interim deal to reopen the Strait of Hormuz began circulating. Qatar confirmed a draft proposal had been shared, and both US and Iranian officials sounded hopeful . Iran and Oman agreed to establish a shipping corridor through the strait, raising expectations of a recovery in energy supplies from the Middle East .

Reopening the strait would lower oil prices and ease inflation fears . Brent crude fell below $80 a barrel, and Treasury yields pushed lower . The net effect: the geopolitical tail risk that had been keeping rate-hike bets alive was fading, and that directly supported gold .

It is worth noting that uncertainty remained—some trader caution persisted—but the overall trajectory of easing tensions and falling crude oil prices was clear enough to fuel the rally.

Broader Metals Rally and Central Bank Demand

Gold was not alone. Silver also jumped over 5% in the same week, and the broader precious-metals complex rallied alongside the weaker dollar and the shifting rate outlook .

Central banks globally were active buyers, adding structural demand that amplified the move . According to Reuters, after stalling around $4,000/oz for weeks, bullion jumped roughly $400 per ounce since the start of August, putting it on track for its best month this century . The last time gold rose 13% or more in a month was September 1999.

Putting It All Together

The gold rally was a textbook multi-factor event. Weak US jobs and inflation data killed rate-hike expectations, the dollar fell, the Strait of Hormuz deal hopes reduced geopolitical and inflation tail risks, and the entire metals complex rode the wave higher. Gold gained roughly 10% from its August 1 level near $4,000 to the $4,380 area by August 14 .