Transcription
In the last video, I talked about the rumor that Donald Trump might announce pegging the gold price to US government bonds on July 4th to prepare for big news. I even went without sleep to watch the live broadcast of America's 250th anniversary celebration because I wanted to witness this new page in history. But what was the result? Fireworks lit up the sky, fighter jets performed flybys, and the 250th anniversary comedy sketches were played with great fun. But Trump did not mention the word 'gold' even once. He only said that America is very strong, talked about making America great and better than before, but refused to talk about gold at all.
You might think he was very busy that day, right? Yes, he was really busy. But he was busy calling the president of FIFA directly to demand a review of the red card of Folarin Balogun, a new US national team player. And in the end, FIFA couldn't withstand the pressure and had to agree to order a temporary ban for 1 year. He would not do the important matters, but he handled trivial matters with great enthusiasm. Of course. Today I'm not going to talk about football. What I want to point out is that when global rules can be rewritten with just a single phone call, the pricing logic of financial markets is equally fragile, isn't it? Alright, let's get back to gold.
These days, many people are starting to say that the $4,000 level is the bottom for gold, and the worst times are over. But my stance is: don't rush to conclusions. Be careful, you might easily get burned. Because in the second half of this year, there will be 3 important events, each of which can change the direction of gold prices or even completely overturn the basic logic you use to view gold. As long as these 3 events are not clear, saying $4,000 is the bottom is still too early to say.
These 3 events are not just ordinary positive or negative factors. They are macro-level forces that can rebuild the gold pricing structure from scratch as soon as their results appear. All the benchmarks you've used to evaluate gold may have to be reshuffled and start counting from 1 again. So what are those events? Why does each have such enormous influence? If you want to know the answer, watch this video to the end, and you will see the big picture and understand everything clearly.
Before we dive into the second half of the year, let's take a couple of minutes to review the market direction in the first half. Going back to late January this year, gold prices in the global market surged to an all-time high of nearly $5,600 per ounce, breaking new records 12 times. At that time, the market was full of excitement and cheers. Many people were fully confident that gold was definitely going to break through $6,000. Just think: if at that time you walked into a gold shop in Yaowarat to buy a 1-baht-weight gold necklace, you would have to pay tens of thousands of baht more than now. And then what happened? The price dropped all the way. On June 30th, gold broke below the key psychological level of $4,000 again, hitting a low of $3,943.
Just think: from the peak in January to now, it's only half a year, but the price has dropped nearly 30%. Throughout Q2, spot gold fell sharply by 14.3%, which is the steepest quarterly decline since 2013. And in June alone, the price dropped 11.2%. As for silver, it's much worse. From the January peak of over $121, the price has been cut in half to around $56, a drop of more than half.
Now, what exactly is the summary of the first half? Let me divide it into 4 periods for clarity. First period: late January, gold hit a new record high at $5,590.98. During this period, the market was speculating on interest rate cuts, central banks around the world were buying gold, and the trend of de-dollarization was strong. Investor sentiment was extremely optimistic. Second period: late January to early February. This was a time of historic collapse. As soon as news broke that Donald Trump nominated Kevin Watch to take the position, the market direction reversed instantly. Global gold prices plunged 9% in a single day, the heaviest drop in nearly 40 years. Gold was sold off from $5,600 to just $4,403 within just 3 days, losing $1,200.
The reason is very simple: the market knows Watch's true nature inside out. He is not a dove who likes accommodative policy; he is an arch-hawk who prefers tight policy. Third period: after hitting the low of $4,403 on February 2, the price rebounded rapidly until March 2, the first trading day after the US and Iran officially clashed. Gold surged to a high of $5,419. This rally reflected buybacks after the price had fallen too much earlier, combined with concerns over tensions in the Middle East, causing flight-to-safety money to hide in gold. Friends, do you see this movement? Overall, the gold price peaks have been gradually decreasing in each cycle: from 5,598 down to 5,419, and then to 4,891. Each rebound is getting weaker, and each decline is getting deeper. This is what we need to watch out for in the first half.
There is another interesting phenomenon. The World Gold Council found that most corrections in gold prices occur during US trading hours, while rebounds often occur during Asian trading hours. What does this mean? It means that people in Asia are buying the dip while the US side is selling. Asia is supporting the price, while Wall Street is pounding it. These two power poles are tug-of-warring. In the end, we have to see who has more strength.
So, we've summarized the first half. Now, what about the second half? After a 30% drop, it seems gold can stand firmly at $4,000. Many people feel this is the bottom. But I tell you: don't rush to conclusions. In the second half, there are still 3 important events. Especially the first one I'm about to tell you. As long as there is no clarity, any decision now is too early. This point is very important. Let's start with the first event.
If in the second half there is only one gold-related thing you must remember by heart, it's this: The Federal Reserve Bank of Kansas City hosts the annual global central bank conference in Jackson Hole, Wyoming since 1982. This place is dubbed the 'holy land of monetary policy direction changes'. Why is it called holy land? Because central bank governors from around the world often use this stage to signal important policy moves. Normally, getting the Fed Chair to leak any information is harder than finding a needle in an ocean. Every time they speak, it's like walking a tightrope: talk too much, fear market panic; talk too little, fear market misinterpretation. But at Jackson Hole, the situation is reversed. They take the initiative to speak, and they choose to talk only about very important issues. This is not made up; there are facts. Events that have happened here in the past confirm it well.
In 2010 and 2012, Ben Bernanke signaled at this event that he would start QE2 and QE3, and later QE2 and QE3 were actually announced. In 2014, Janet Yellen signaled that the Fed was preparing to shift toward rate hikes. In 2020, Jerome Powell announced the average inflation target at this event. In 2022, the same Powell showed a firm stance to crush inflation. And in 2025, Powell announced adjustments to the monetary policy framework, which the market interpreted as a clear signal for a rate cut in September. In the past 10 years, on the first trading day after the Jackson Hole conference, gold prices rose 9 times and fell only once – that decline was in 2016. This is no coincidence because the signals sent from this conference directly affect market expectations for interest rate direction in the months ahead. And gold is the asset most sensitive to interest rate expectations. If the market expects rate hikes, gold falls; if it expects rate cuts, gold surges.
You might be thinking: in the past 10 years, gold rose 9 times, so this time the chance of rising must be very high, right? I'll hold that thought for now because the variables this time are not the same as the previous 9 times. The person sitting in that position has been replaced. How the replacement will affect this conference – we'll discuss later. Now let's see why this time is different from previous years. This will be Watch's first appearance at Jackson Hole after taking office. He has already clearly declared at the Sintra conference in June that there will be no more forward guidance. This means the market can no longer make money by guessing the Fed's mind. In the past, you might stare at the Fed's statements to find clues. But now Watch has closed that path completely. However, Jackson Hole is a place where central bank governors often 'let loose'. Even if Watch does not give official guidance, every word, tone, and points he emphasizes will surely be interpreted and extrapolated by the market. Before the FOMC meeting in September, this will be the only opportunity for the market to hear full policy thinking from his own mouth.
And here are 3 scenarios I think are possible. Scenario 1: Dovish. If he says inflation risks are decreasing or rate hikes must be done carefully, the market will immediately interpret that the Fed is not in a rush to raise rates. The dollar will weaken, and gold will rebound. This is the script that the gold bulls want to see most. Scenario 2: Hawkish. If he says inflation remains the main mission or does not rule out the possibility of tighter policy, the market will interpret that the Fed is ready to raise rates. The dollar will strengthen, and gold will be under continuous pressure. This is the script that the gold bears want to see most. Scenario 3: Fence-sitting. If he says nothing at all or says something that sounds like nothing, the market will have to keep guessing. Gold will oscillate in a narrow range. This is the most mentally torturing scenario – neither up nor down. But when you hold something, the most uncomfortable thing is not a sharp drop, but a sideways move.
But if you ask me which scenario is most likely, based on our analysis of Watch's direction in previous videos plus full support from Trump, I tell you: Scenario 2, the hawkish one, is highly likely. In the first FOMC meeting after Watch took office, the dot plot clearly showed a hawkish trend. He himself reiterated over and over that inflation remains the number one target and the 2% inflation target is non-negotiable. He canceled forward guidance, removed all words implying accommodative policy, completely destroying market hopes for rate cuts. He announced the establishment of 5 working groups to thoroughly review the Fed's policy framework. These actions send a very clear signal that he is not here to flood the market with money.
As for Trump's stance, it's very interesting. At first, when Trump nominated Watch, outsiders often interpreted it as finding a weak-willed person to order rate cuts. But what happened? After Watch took office, Trump came out publicly and said, 'I listen to him and hope he has full independence in decision-making.' A president known for pressuring the Fed suddenly became soft. This doesn't mean Trump changed his nature; it means the script has changed. When the situation demands high interest rates, not low rates, to harvest benefits, Trump is ready to change his words instantly. Therefore, if Watch goes to Jackson Hole and again emphasizes that inflation remains the main target and that interest rates need to stay at a tight level for a long time, you should not be surprised. That's what he has been doing all along. He just changed to a bigger stage to announce it to the world.
Alright, let's move on to the second event: the FOMC rate decision meeting in September. You might wonder, 'Hey, what about the July meeting? Why skip it?' The reason is that July has a very high probability of no movement, which the market already knows. More importantly, the Fed itself is also waiting – waiting for the Jackson Hole signal in August, waiting to build some consensus within the group first. So the July meeting will have nothing exciting to anticipate, and it's not worth your time to watch it.
But September is the real deal. Watch has canceled forward guidance, so the market can no longer profit from guessing the Fed's mind. Therefore, the importance of the dot plot is far greater than in the past. This is the only concrete indicator the market can see. Imagine it's a voting machine for Fed officials. Each official anonymously places a dot. Where the dot lands on the interest rate range means he thinks the year-end rate should be there. As soon as the dot plot is released, the market instantly sees where the majority stands. And this point is crucial.
The dot plot in September is not created in a vacuum; it is built on the basis of signals released at Jackson Hole in August. If August sends hawkish signals, the September dot plot is likely to lean hawkish. If he gives dovish signals, the dot plot will also be dovish. So September didn't just suddenly become important; it is an extension of August's signals and the second confirmation of clarity for the second half. Here also there are 3 possible scenarios. Scenario 1: Hawkish dot plot. If most officials still support raising rates this year, gold will face heavy pressure. The market will reassess the rate hike path, the dollar will strengthen, and gold may continue to fall. Scenario 2: Dovish dot plot. If expectations for rate hikes clearly decrease, gold may rebound. The market will interpret that the Fed has backed down, the dollar will weaken, and gold has a chance to strengthen significantly. Scenario 3: Split dot plot. If officials' opinions are divided into multiple factions, the market will have to go back to guessing, and gold will continue to oscillate. This is the most headache-inducing scenario because the direction is unclear; both buyers and sellers don't dare to go all in.
Therefore, the pace for the second half is very clear: August – listen for direction; September – wait for confirmation. You need to know what Watch is thinking first, then see if he can build consensus within the Fed. Once these two steps are done, the true direction of gold in the second half will appear. And the third event: On November 3, 2026, the United States will hold midterm elections. All 435 seats in the House of Representatives will be up for reelection, and 35 Senate seats will also be voted on.
Why is this election so critical for gold, like a matter of life and death? Let's see. First: The election results will determine policy direction for the remainder of Trump's term. Currently, the Republican Party holds only a slim lead in the House. Based on current election conditions and past lessons, the most likely scenario for the midterms is that Republicans will lose control of the House but retain a Senate majority. As soon as they lose the House, Trump will immediately become a lame duck. Pushing policies will be hindered, political uncertainty will soar, and demand for safe-haven assets will push gold prices higher.
Second: The election will affect US-Iran relations. Oil prices directly impact voters' wallets. If gasoline prices soar before the election, people will vent their anger on the ruling party. Trump's main campaign slogan was ending wars. So before the election, he will have strong motivation to keep the US-Iran situation calm to lower oil prices and win over the public. Therefore, before the midterms, there may be a short ceasefire period. But it's the post-election uncertainty that might trigger safe-haven demand, because no matter who wins, half the country will still be dissatisfied.
Third: The election will affect the Fed's decisions. History provides a clear example. From November 1970 to December 1971, then-Fed Chair Arthur Burns could not withstand pressure from President Nixon and caved in, cutting rates by a total of 1.5% and 5%, and in the end, it became the trigger for a massive inflation outbreak in the US. Even though the Fed claims to be independent, in an election year it's very hard to ignore political pressure. If Trump continues to pressure the Fed to cut rates before the election, how long do you think they can hold out? After all, Watch was Trump's own nominee. The head of strategy at MKSP predicts that around the midterm elections, gold prices may surge to $6,750 per ounce. Midterm election years are considered the best-performing years for gold in the 4-year cycle. The logic is straightforward: political uncertainty drives safe-haven demand.
All three things I've mentioned are uncertainties. What will Watch say at Jackson Hole? What will the September dot plot look like? Who will win the midterms? But aside from these three uncertainties, in the second half we also have three certainties. Certainty #1: Central banks around the world continue to buy gold. Over the past 4 years, central banks have been buying an average of about 1,000 tons per year. In Q1 2026 alone, central banks increased gold reserves by 244 tons. A World Gold Council survey shows that 89% of central banks surveyed expect global gold reserves to increase continuously over the next 12 months, and 45% plan to buy more gold within the next 12 months. Whether the Fed raises or cuts rates, whether the US and Iran fight or negotiate, the buying from central banks will always support the price. And this is gold's excellent safety cushion.
Certainty #2: Asian investors continue to buy on dips. The World Gold Council found that most gold price pullbacks occur during US market hours, but rebounds occur during Asian hours. Wall Street may pound the price, but buying from Asia always supports it. You sell, I'll buy – that's how it is. Certainty #3: The $4,000 level is a trigger that can shoot both ways. The World Gold Council's mid-year outlook report clearly states that if gold remains consistently below $4,000, it may trigger a new round of selling. Conversely, if gold drops more than 10% from current levels, it may trigger speculative buying from long-term investors waiting to pick up bargains. Therefore, the $4,000 level is both a resistance and a support at the same time.
After confirming these three certainties, let's look at the views of major financial institutions on gold's outlook for the second half. Interestingly, they are arguing fiercely. The bullish side believes gold can still go far. Goldman Sachs might have cut its year-end target from 5,400 down to 4,900, a drop of $500, but they clearly state that by end of 2027, they still see it at 5,400. UBS is even more aggressive, giving a 12-month target of 5,200. Morgan Stanley also stands on the bullish side, with a second-half target of 5,200. JP Morgan is more conservative: Q3 target 4,300 and Q4 target 4,500.
Meanwhile, the World Gold Council itself is quite cautious, putting the baseline scenario around 4,100 with a +/-5% volatility range. But the cautious side is equally loud. Deutsche Bank cut its Q3 forecast from 6,000 down to 4,300 and Q4 to just 4,800 – a more drastic cut than Goldman Sachs. Commerzbank sees year-end at 4,800, which is not very bright. But the most interesting is JP Morgan. On one hand, they shout a target of 4,500, putting them in the bullish camp. But at the same time, they stab from behind by saying that if the Fed decides to raise rates prematurely, gold could break below 4,000 again or even test the 3,500-3,600 level.
What does that mean? The same institution – optimistic scenario says 4,500, pessimistic says 3,500 – a difference of $1,000. What does this show? It shows that no one is willing to put their head on the line that the second half will definitely go up or down. The main point of contention is only one thing: will the Fed raise rates, and how many times? As long as this question has no answer, all forecasts are just random guesses.
And the key to breaking this ambiguity is in August and September. What signal will the Jackson Hole conference send? Which side will each Fed official choose to stand on in the September dot plot? As soon as these two events conclude, the answer will gradually appear. But until then, all predictions are just personal opinions of the speaker.
Alright, I've talked at length. Let's return to the question everyone wants to know most: Gold has dropped 30%. Will it find a bottom and rebound in the second half? If you ask me, my answer may differ from typical market analysis. Many people whisper to you that gold has hit bottom, and $4,000 is a reinforced concrete floor. But my stance remains the same: don't rush to conclude. Because Jackson Hole in August hasn't started, the September dot plot isn't out, and the midterm elections in November haven't been voted on. The outcome of any one of these three events could turn the current bottom into just a rest stop on the mountain.
More importantly, Watch has clearly sent hawkish signals since his first FOMC meeting – canceling forward guidance, removing dovish language, and emphasizing the 2% inflation target. What do you think a person like that will say at Jackson Hole? The chance that he will say 'don't worry about inflation anymore' is almost zero. He will likely reiterate his stance that inflation remains the main mission, rates must stay high for a long time, or even hint that rate hikes are still an option.
Therefore, my view on the second half is quite cautious. It doesn't mean gold will collapse, but it means that saying 'bottom' now is too early. The year's low may not yet have appeared. Of course, the long-term direction of gold has never been this clear: central bank buying, de-dollarization, and Asian support. But for the medium term, this could be a rather nerve-wracking period.
Going back to the influence of the three events I mentioned: they are not just things that will cause prices to go up or down a couple of times in the second half. They could be historical turning points. As soon as the Jackson Hole signal is confirmed, the September dot plot numbers are revealed, and the midterm election results are announced, they could dismantle the basic logical structure you've used to view gold your whole life.
Therefore, the biggest risk right now is not guessing how low gold will go, but rushing to conclusions while the direction is still hazy. This is my stance: don't panic, don't follow the crowd. Wait for clear signals before moving. When the direction is unclear, not choosing a side and standing outside the market is definitely better than jumping in and standing on the wrong side.
And what about you, friends? Do you think gold will surge to $6,000 or drop below $3,500 in the second half? Feel free to comment and exchange opinions below. Finally, let me emphasize that all content is just market observation and information sharing, not investment advice. This is Goh. I wish everyone can stand firm and preserve wealth amidst the fierce waves of the capitalist world, to welcome the golden age that is yours. See you in the next video. Bye bye.