Gold Holds Near $4,400 as ETF Flows Return; Saxo Flags 289 Tonnes of Q2 Central Bank Buying
Key Takeaways
- •Saxo Bank's Ole Hansen says gold has broken higher from a week-long consolidation that held support just below $4,000, with $4,500 — the 200-day moving average — the next key technical test.
- •Softer US economic data, including a 0.6% July retail sales decline that was the first in nine months, has reduced expectations of further Fed tightening, and Goldman Sachs has called a September rate hike very unlikely.
- •Global gold ETFs added roughly 23 tonnes, or about $3 billion, in July — the first inflow after two consecutive months of outflows — while COMEX hedge fund net longs climbed to an 11-month high.
- •Central bank purchases reached an estimated 289 tonnes in the second quarter, and official-sector buying has exceeded 1,000 tonnes in each of 2022, 2023 and 2024, according to World Gold Council data.
- •Hansen sees elevated long-end Treasury yields, driven partly by fiscal and term risk premium rather than growth expectations, as gold's main remaining headwind, and views a revival of inflation or employment strength lifting real yields and the dollar together as the biggest risk to the rebound.
Gold is holding firm near $4,400 an ounce, according to Saxo Bank, as fading Federal Reserve rate hike expectations, a softening dollar and returning investment demand outweigh elevated bond yields — the market's main remaining headwind. Ole Hansen, the bank's head of commodity strategy, said the metal has broken higher from a week-long consolidation phase that found support just below $4,000.
Rate backdrop shifts in gold's favour
The interest rate backdrop has shifted clearly in gold's favour. Softer US employment, inflation and consumer data — including a 0.6% drop in July retail sales, the first decline in nine months — have reduced pressure on the Fed to tighten further. Goldman Sachs chief economist Jan Hatzius recently called a September hike “very unlikely”, a view Hansen says aligns with Saxo's own long-held position that the Fed will struggle to raise rates further from here. The Fed's September meeting and the next round of employment and inflation data now stand as the immediate checkpoints for that view.
The dollar has added a second tailwind, with the Bloomberg Dollar Index beginning to roll over after its earlier strength this year, reinforcing the usual weaker-dollar, higher-gold relationship. Fading Fed hike expectations, a rolling-over dollar, returning ETF demand and steady central bank buying are all pulling in gold's favour, leaving bond yields as the sole holdout in an otherwise supportive setup.
Yields: the last holdout
Bond yields remain the exception. Because gold pays no interest, higher yields normally raise the opportunity cost of holding bullion instead of interest-bearing assets — the classic channel through which the Treasury market weighs on the metal. Long-dated Treasury yields are sitting close to multi-year highs despite the softer data, which Hansen attributes partly to a rising fiscal and term risk premium rather than growth or policy expectations. He points to Congressional Budget Office projections that net federal interest costs will exceed $1 trillion in 2026. Debt issuance from AI hyperscalers funding infrastructure buildouts is compounding the pressure, competing directly with Treasuries for capital.
Saxo's framing turns the usual gold playbook on its head: persistently high long-end Treasury yields, normally bullion's biggest headwind, may increasingly reflect fiscal and term premium concerns rather than growth or policy tightening. Hansen argues this dynamic could work in gold's favour over time, weakening the metal's traditional negative relationship with yields if elevated rates increasingly reflect fiscal concern rather than economic strength — effectively converting bond market anxiety into a tailwind instead of a headwind, with everything except yields now pointing in the same supportive direction.
ETF flows return; central banks keep buying
Investment demand is recovering alongside the shift in macro drivers. Global gold ETFs added around 23 tonnes and $3 billion in July, the first inflow after two consecutive months of outflows. COMEX speculative net longs — positions betting on rising prices — have climbed to a January high, an 11-month high among hedge funds specifically.
Central bank buying remains a steady undercurrent, with second-quarter purchases estimated at 289 tonnes — a dynamic Hansen compares to 2022-23, when strong official-sector demand helped prevent the deep correction many expected despite aggressive rate hikes at the time. For scale, official-sector purchases exceeded 1,000 tonnes in each of 2022, 2023 and 2024, according to World Gold Council data.
$4,500 the technical line in the sand
Hansen flags $4,500, where the 200-day moving average sits, as the next key technical test and the line in the sand. A sustained break above that level would likely draw further momentum and ETF demand. A drop back below $4,200, by contrast, would point to continued consolidation rather than the start of a fresh bull leg.
Risks to the outlook
The clearest risk is a renewed acceleration in inflation or employment data reviving both real yields and the dollar together — a combination Hansen describes as the most challenging macro backdrop gold could face from here, and the scenario most likely to unwind the recent rebound. The momentum-driven nature of part of the rally also leaves the current technical breakout at risk of failure.
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