Gold climbed toward $4,700 an ounce in August, reaching its loftiest level since mid-May, as investment demand picked up momentum over the summer months. Krishan Gopaul, senior analyst for EMEA at the World Gold Council, cautioned that the recent U.S. Treasury announcement to expand bond buybacks - issued late in the month - likely accelerated a move that was already underway rather than creating it.
Gopaul said the market backdrop, marked by mounting debt worries in the United States and elsewhere, provided fertile ground for the rally. "There are still other key drivers of global prices at play within the market," he said, "but the buy-back announcement, against a backdrop of debt mountain concerns - in the US and elsewhere - seemed to accelerate an existing trend rather than creating a new one."
Investment demand began to strengthen in July and gathered pace in August, the analyst said. According to the figures Gopaul highlighted, global physically backed gold exchange-traded funds recorded $3 billion of net inflows in July, reversing two consecutive months of outflows, and then saw a further $17 billion of inflows in August. He noted clearer improvement in investment demand in both China and India.
Gopaul emphasised that the most recent leg of the rally appears to have been driven primarily by investment channels - notably futures positioning and gold-backed ETF inflows - rather than by a sharp upswing in retail physical buying. He added that retail physical demand probably provided marginal support. "The latest leg of the rally appears to have been led primarily by investment demand, particularly futures positioning and gold-backed ETF inflows, rather than by a sudden acceleration in retail physical demand," he said, "physical consumer demand likely provided support at the margin."
Central bank purchases were described as a substantive, underlying pillar supporting the market, but Gopaul argued it is more difficult to point to official sector buying as the immediate spark behind a rally that unfolded over several weeks. He expects official sector purchases to remain robust this year, albeit at levels below those seen in 2025.
Looking ahead, Gopaul judged that fundamentals remain broadly supportive of the precious metal, but he warned that ongoing uncertainty and market volatility are likely to shape the outlook through the rest of the year. He outlined factors that could act as headwinds and those that would be supportive.
Near-term obstacles, he said, would include a renewed rise in long-dated real yields, a stronger U.S. dollar, or a more hawkish-than-expected stance from the Federal Reserve. Conversely, further dollar weakness, renewed downward pressure on real yields, continued ETF inflows, or an escalation in fiscal and geopolitical risk would likely be supportive for gold.
Market implications
Gopaul's assessment places particular emphasis on investment flows - both in ETFs and futures markets - as the engine of the recent gold advance. Central banks remain a steady, structural buyer rather than the proximate catalyst for the late-summer increase. The U.S. Treasury's decision to expand buybacks is viewed as an accelerant amid existing debt concerns rather than the origin of the rally.
As the gold market navigates the remainder of the year, movements in real yields, dollar strength, and Fed policy expectations will be closely watched by investors and market participants, while continued ETF demand and geopolitical or fiscal stress could reinforce bullion prices.