FX.co ★ Gold Extends Rally on Investment Demand

Gold rose to about $4,400 an ounce on Tuesday, its highest level in two months, as investment demand for precious metals strengthened despite mounting inflation risks and expectations of interest rate hikes driven by surging oil prices. Chinese institutional investors continued to expand their bullion holdings as a hedge against volatility in other asset classes, with gold-backed exchange-traded funds in China posting their longest streak of inflows in months. The People’s Bank of China also stepped up its gold purchases in July, increasing reserves by roughly 20 tons after adding around 15 tons in June, the largest monthly build-up since October 2023. At the same time, uncertainty lingered over a possible US–Iran agreement to end the conflict and reopen the Strait of Hormuz. Investors were also looking ahead to a key US inflation report this week for further guidance on the Federal Reserve’s policy outlook.