Gold Surges on Strong China Demand As Bitcoin Takes a Breather

Gold surged above $4,300 per ounce on Aug. 5, gaining about 4% as renewed Chinese demand and easing inflation concerns pushed the precious metal to its highest level since June.

Chinese gold-backed exchange-traded funds recorded 14 consecutive days of inflows through August 3, their longest streak since March.

The buying helped stabilize bullion after its sharp second-quarter correction while also reinforcing China’s role as the world’s largest gold market.

Official-sector demand has also remained strong. The People’s Bank of China added 33 tonnes of gold during the second quarter, its largest quarterly purchase since late 2023, while global central banks bought a net 288.9 tonnes, according to World Gold Council data published on July 30.

The rally followed signs of progress in talks between the United States and Iran.

Expectations of reduced Middle East tensions pressured oil prices, easing fears that higher energy costs could reignite inflation and force the Federal Reserve to maintain restrictive interest rates.

Lower Treasury yields also supported gold, which does not pay interest and generally becomes more attractive when bond yields decline.

Crypto markets were comparatively subdued on August 5, with Bitcoin and major altcoins posting modest gains after a difficult second quarter.

Bitcoin fell roughly 14 percent during Q2 and briefly traded below $60,000, while US spot Bitcoin ETFs recorded nearly $5 billion in withdrawals.

Early-August flows have since turned more constructive, suggesting some investors are returning after the quarter’s risk-off rotation.

The downturn also weighed heavily on publicly traded crypto companies. Strategy recorded an $8.33 billion second-quarter operating loss, driven almost entirely by an unrealised decline in the value of its Bitcoin holdings.