Gold Books Its First Monthly Gain Since February — Then Iran Fighting Flares Again

Utsavi Gandhi

Gold closed out July with its first monthly gain since February, rising roughly 2% for the month, after briefly reclaiming US$4,100 on Friday as the US dollar weakened sharply. The trigger was Japan: its Ministry of Finance is suspected of stepping into currency markets again to buy yen and prop it up, after the currency slid to levels that make imports (fuel, food) painfully expensive for Japanese households. When Japan does this, it effectively sells US dollars, which weakens the dollar broadly — and a weaker dollar mechanically makes dollar-priced gold cheaper for the rest of the world, pulling in buyers. That's a real, repeatable mechanism, not noise: Japan has intervened this way several times in 2026, and each episode has coincided with a short-term gold pop.

That pop didn't hold. By Friday's close gold had given most of it back, settling around US$4,043/oz — down about 1.5% on the day — as the US resumed strikes on Iranian targets in retaliation for attacks on American assets in the Middle East, and President Trump signalled the campaign was far from over, saying the US would be "hitting them very hard." Gold remains roughly 27% below January's all-time high above US$5,600, while still up about 20% over the past year. Miners had a strong week regardless of Friday's pullback: the ASX Metals & Mining index decisively outpaced a healthcare-hit broader market, with Newmont and Evolution Mining both firmer as bullion futures charged as high as US$4,102 intraday.

The Fed's 29 July hold (rates unchanged in the 3.50%–3.75% range, a 9-3 vote with three officials pushing for a hike) removed one near-term source of anxiety, but markets are still pricing roughly 63–65% odds of a September hike — this wasn't a dovish turn, just a pause in the hawkish drumbeat. Silver closed the week at US$57.62/oz, down over 2% on the day and roughly 2.5% for the month, though still up more than 55% over the past year.

The real signal from the World Gold Council's Q2 2026 Gold Demand Trends, released 30 July: demand held up despite the price correction, with H1 demand up 2% y/y to a record US$380bn and central banks alone buying 289t in Q2. The WGC expects the next leg of H2 demand to come increasingly from Asian buying and OTC* activity instead of Western ETF flows — and there's a reason to think that buying could be sturdier than usual. China's 24 July shutdown of leveraged retail paper-gold trading has already pushed speculative retail traders out of that market; what's left behind, and what Q3 data should start to confirm, is genuine physical and institutional demand rather than leveraged bets that can reverse overnight.

Put together, gold's underlying demand base looks structurally sound even as headline prices stay volatile — and for now, that volatility is being driven far more by the Iran conflict and Fed timing than by any real weakness in buying. Bank forecasts still diverge on how fast prices get there, from the WGC's own range-bound base case (a ~US$3,760 floor) to J.P. Morgan's more bullish US$6,000 year-end call, but what's changed this week is the timeline, not the thesis.

*OTC (over-the-counter): large, private gold trades between banks, bullion dealers and institutions, done directly rather than through an exchange or ETF.

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