Gold prices surged to 4,461 dollars per ounce on Thursday, posting their strongest single-day gain in weeks after US inflation data undercut expectations for a Federal Reserve rate hike.
The precious metal rallied 1.78 percent as cooler-than-expected Consumer Price Index data reduced the implied probability of a September Fed funds rate hike to roughly 40 percent, down from 54 percent just a week earlier. Spot gold had already climbed above 4,400 dollars earlier in the week, and Thursday’s advance pushed it to its highest level in over two months.
CPI Data Shifts Fed Expectations
US CPI rose 3.4 percent year-on-year in July, in line with forecasts but soft enough to ease concerns about persistent inflationary pressure. Monthly CPI came in at just 0.1 percent, while core CPI held steady at 2.5 percent on an annual basis. The data painted a picture of gradual disinflation without a collapse in demand, a scenario that favours non-yielding assets like gold.
The shift in rate expectations was the primary catalyst for gold’s advance. Lower anticipated policy rates reduce the opportunity cost of holding gold, which pays no interest, making it more attractive relative to fixed-income alternatives.
Central Bank Buying Hits Record Pace
The price surge has been underpinned by record central bank demand. The World Gold Council reported that central banks purchased 289 tonnes of gold in the second quarter of 2026, marking the strongest quarter of the year. Poland and China were among the largest official buyers as central banks continued diversifying reserve holdings away from dollar-denominated assets.
Goldman Sachs forecasts that central bank purchases will average 60 metric tonnes per month through 2026 as emerging-market central banks accelerate reserve diversification. The bank has raised its year-end gold forecast to 5,400 dollars per ounce, while J.P. Morgan projects gold could approach 6,000 dollars by the fourth quarter.
Bank of America has also lifted its gold outlook to 5,000 dollars per ounce, citing fiscal deficits, rising US debt now above 35 trillion dollars, and a weakening dollar as structural tailwinds. Geopolitical tensions around the Strait of Hormuz and the ongoing US-Iran conflict have also sustained safe-haven demand.
Gold is now up more than 31 percent year-on-year, having reached an all-time high of 5,608 dollars in January 2026 before pulling back. Analysts describe the current rally as a structural shift driven by both official and private sector demand rather than a short-term speculative trade.
Sources: Reuters; TradingEconomics; World Gold Council; FXLeaders; Goldman Sachs; Bank of America
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