As tech giants all fall, gold prices explode! Market risk-averse buying surges as gold regains upward momentum ahead of Jackson Hole

According to the Zhitong Finance APP, ahead of the upcoming Jackson Hole Global Central Bank Symposium, both gold futures and spot prices have regained upward momentum as the stock prices of major tech giants in the U.S. stock market continue to decline. Especially during Wednesday's trading session, as the S&P 500 and Nasdaq 100 indices weakened for two consecutive days due to the falling stock prices of tech giants, market risk aversion significantly increased, pushing gold spot prices higher to around the critical level of $3,350. Additionally, gold prices benefited from rising expectations of a Federal Reserve interest rate cut in September and a continued weakening of the U.S. dollar.

Investors are anxiously awaiting the speech by Federal Reserve Chairman Jerome Powell at the Jackson Hole meeting to look for signals regarding future Federal Reserve monetary policy. Before Powell delivers his crucial speech, market risk aversion buying and panic over the high valuations of tech giants are expected to support a continued rise in gold prices. On Wednesday, the S&P 500 and Nasdaq 100 indices in the U.S. stock market continued to weaken, particularly as the seven major tech giants with high market capitalization led the decline, with Nvidia, valued at over $4 trillion, experiencing a cumulative drop of nearly 4% over two days. The weakness of these tech giants has led to a four-day decline in the S&P 500 index.

According to major Wall Street firms like Goldman Sachs, JP Morgan, and Citigroup, risk aversion and panic are undoubtedly important catalysts for the short-term rise in gold prices. The outlook for U.S. economic growth has turned pessimistic, and expectations for Federal Reserve interest rate cuts have significantly increased. These two factors may serve as long-term bullish catalysts for gold fundamentals for a considerable time to come.

Trump Urges Fed to Cut Rates Again

Despite the latest Federal Reserve monetary policy meeting minutes showing a hawkish stance, Trump himself has called for the resignation of Fed Governor Cook. If Cook indeed succumbs to pressure and resigns, it would create a new vacancy on the Federal Reserve Board, allowing Trump to further appoint candidates who support rate cuts. Additionally, he has recently reiterated his call for Powell to immediately push for rate cuts and has publicly stated that the next Fed chair and new Fed governors he nominates must support a rate-cutting stance, undoubtedly boosting the market's dovish expectations regarding Fed rate cuts.

The minutes from the Fed's July FOMC monetary policy meeting indicate that the neutral monetary policy stance of the Fed has gained broader support, with only two dissenters supporting the rate-cutting process. The minutes show that despite increasing concerns about inflation and a weak labor market, the vast majority of policymakers believe that it is too early to cut rates now. Two Fed governors held differing opinions and supported a rate cut, marking the first time in over 30 years that multiple governors opposed a monetary policy decision.

In the days leading up to the Jackson Hole meeting, investors have generally maintained a cautious stance, pushing gold prices back up. With the release of the Fed meeting minutes, the market is currently anxiously awaiting Chairman Powell's speech on Friday for important hints regarding whether the Fed will cut rates in September and during the remaining monetary policy meetings this year.

According to the Chicago Mercantile Exchange (CME) "FedWatch Tool," interest rate futures traders currently widely expect the Fed to initiate a new round of rate cuts in September, with the "FedWatch Tool" indicating a nearly 90% probability of a 25 basis point rate cut in September At the same time, U.S. President Trump called for the resignation of Federal Reserve Governor Lisa Cook on suspicion of mortgage fraud, as the president is persistently trying to enhance his influence over the Federal Reserve FOMC monetary policy.

Goldman Sachs is optimistic about gold prices hitting $4,000, while Citigroup, which is bearish on gold prices in the long term, turns bullish in the short term

Goldman Sachs analysts stated in a recent research report that due to a seasonal slowdown in global central bank and institutional demand for gold, gold prices have been fluctuating within a range for several weeks, but the prices still seem to be stable. They indicated that as long as gold prices do not show a sustained decline, it suggests that the market's buying power for gold remains strong. Goldman Sachs maintains its aggressive bullish expectation that the spot price of gold could reach $4,000 per ounce by mid-2026.

Goldman Sachs noted that its strong bullish stance on gold prices is primarily driven by structurally strong global central bank demand and continuous inflows into gold ETFs, supported by the Federal Reserve's impending shift to a rate-cutting stance and a 30% risk of an economic recession in the U.S. over the next 12 months. These factors may continue to drive global funds into gold; even if a peace agreement is reached between Russia and Ukraine, leading to a temporary sell-off by speculators and a pullback in gold prices, such an agreement would not change the fundamentals.

The near-month COMEX gold futures price for August rose more than 1% on Wednesday to $3,343.40 per ounce, marking a new closing high for the week. During the session, gold futures and spot prices briefly exceeded the $3,350 per ounce mark; the near-month August COMEX silver futures price also followed gold prices upward, closing up 1.2% on Wednesday at $37.705 per ounce.

During the period when gold prices reached historical highs and remained near those levels, Citigroup, a major Wall Street bank that maintained a bearish outlook on gold, shifted to a bullish stance at least in the short term following the release of an extremely weak U.S. non-farm payroll report, which can be described as "avalanche-like." In the latest research report released on Monday, the institution significantly raised its gold price forecast for the next three months from $3,300 per ounce to $3,500 per ounce and adjusted its expected trading range from the long-anticipated $3,100–$3,500 to $3,300–$3,600, emphasizing that the core reason is the significant deterioration in the outlook for U.S. economic growth and inflation.

"In the second half of 2025, the growth trend of the U.S. economy is expected to weaken, and inflation concerns related to tariffs are likely to continue to escalate. Coupled with a weaker dollar, gold prices will rise moderately, potentially setting new historical highs," Citigroup stated in its research report.

Another major Wall Street bank, JP Morgan, indicated that the deterioration of U.S. non-farm employment data will be the strongest bullish catalyst for gold prices. In an optimistic scenario, JP Morgan expects gold prices to move towards the target price of $3,675 per ounce by the end of the year and anticipates that it could reach $4,000 per ounce as early as next year JP Morgan stated that the persistently weak private employment growth data will be sufficient to change market sentiment and determine a rate cut in September. In this scenario, the decline in U.S. Treasury yields may gain stronger momentum, accelerating the rotation of funds into gold ETFs and futures markets. JP Morgan emphasized that if U.S. labor data shows more substantial deterioration, prompting the Federal Reserve to cut rates, it will drive the demand for gold ETFs and result in the most significant bullish reaction in gold prices, solidifying a strong gold bull market trend towards a breakthrough of $4,000 per ounce