On Friday (July 30), international gold prices rose. Gold hit its biggest increase in more than two months. Spot gold rose by more than 1%, setting a new two-week high to US$1832.71 per ounce, because the Federal Reserve expressed its desire to reduce the size. After the stimulus measures saw the economy make more progress towards its goals, real yields fell to record lows and the dollar fell.

The price of gold hit the highest price of US$1832.71 per ounce since July 15 last day, and this week’s cumulative increase is nearly 1.5%, which is expected to hit the biggest weekly level since May 21. Lower interest rates reduce the opportunity cost of holding gold as a non-interest-bearing asset. The world's largest gold exchange-traded fund (ETF)-SPDR Gold Trust increased its gold holdings by 0.6% on Thursday, the first increase in about a month.

Bart Melek, head of commodity strategy at TD Securities, said that the Fed’s remarks convinced traders that the monetary stimulus would not be cancelled in a short period of time, which caused yields to fall across the board. David Meger, Director of Metal Trading at High Ridge Futures, said that you will see inflation heat up because the Fed is more concerned about employment and will not limit inflation in the short term. This is a positive environment for precious metals. This rally is not short-lived, but may be more sustained, because nothing can stop gold from rising.

A survey conducted by HSBC Holdings (HSBC) on Thursday showed that emerging market investors are increasingly worried about the economic growth prospects of developing countries, holding large amounts of funds but few funds deployment plans in the coming months. This echoes growing concerns about the growth prospects of emerging economies. The International Monetary Fund (IMF) on Tuesday lowered its growth forecast for emerging economies in 2021 by 0.4 percentage points to 6.3%, citing slow progress in vaccination.

From a technical point of view, the price of gold has broken through the 200-day moving average, which is a positive bullish signal. If it can break through the July 15 high, the bullish trend will become more obvious, and investors can be determined to go long. However, if the intraday data is relatively strong, it may drag down the price of gold. If it falls back below the 200-day moving average, the short-term may form an M head pattern, which will be technically negative for the gold price. Investors are advised to do more on dips.

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