Sinolink calls gold's rebound a false rally, targets $4,300-$4,500

Gold at $4,072.53/oz has rebounded 2.6% since July 20, but Sinolink Securities calls the move a "false rally" driven by capital rotating out of AI and technology stocks.

"The recent gold and silver rebound is the result of capital rotating out of technology stocks as AI momentum unwinds, not the start of a new trend," Sinolink Securities said in a July 24 research note. "Gold has not yet broken out of its downward channel."

Gold spot traded at $4,072.53/oz as of 8:42 a.m. ET, down 1.4% in the past 24 hours after hitting a two-week high of $4,165.68 on Wednesday, according to Forbes data. The 24-hour low was $4,064.95. SPDR Gold ETF holdings rose to 1,008 tonnes on July 22 from 999 tonnes on July 17, while COMEX gold futures speculative positions climbed to 194,000 contracts in the week ended July 4. Silver rebounded 4.5% over the same period, while gold mining stocks surged — Zijin Mining gained 16.6% and Shandong Gold rose 15.4%.

Sinolink maintained its year-end gold target of $4,300 to $4,500/oz, implying upside of 5.6% to 10.5% from current levels, but cautioned that a sustained rally requires clearer triggers. The firm said a true reversal needs confirmation of three conditions: AI bubble concerns resurfacing, rate-cut expectations restarting, and dollar credit worries re-emerging — none of which are yet evident.

Capital Rotation, Not Fundamentals, Drives Gold's 2.6% Rebound

The report attributed gold's recent bounce to a sector rotation triggered by the unwinding of AI hardware trades, not a fundamental shift in gold's supply-demand balance. Since late June, Brent crude has rallied 32%, the 10-year US real yield has risen 15 basis points, and the 10-year breakeven inflation rate has climbed 6 basis points — yet the market's pricing of December Fed rate hikes has only edged up to 1.3 from 1.1, suggesting rate expectations may have peaked.

"Rate hike expectations may have passed their most hawkish phase, which has somewhat catalyzed the rebound in gold, silver, and base metals," Sinolink said. However, the firm noted that Google's upward revision of its 2026 capital expenditure plan to $195 billion to $205 billion suggests AI investment remains robust, reducing the likelihood of a near-term AI bubble narrative.

Three Conditions Needed for Gold to Break Higher

Sinolink outlined three scenarios that could unlock higher gold prices. The first, and most probable, is a revival of AI bubble concerns — if cloud capital expenditure returns are questioned, rotation out of tech could strengthen gold's risk-reward profile. The second is a restart of rate-cut expectations, which would require inflation pressures to ease. The third, a dollar credit confidence shock, is a low-probability, high-payoff scenario that could emerge from US fiscal or debt policy risks ahead of the midterm elections.

Gold has appreciated 126.6% over the past five years, compared with the S&P 500's 71.6% total return, according to SPDR S&P 500 ETF Trust data. The metal's all-time high of $5,597.23 was set on Jan. 29, 2026, and its 52-week low stands at $3,283.00.

In a separate session Thursday, gold fell 2.1% to $4,041.59/oz after Brent crude topped $100 a barrel for the first time since late May, fueling inflation concerns and reinforcing expectations of Federal Reserve rate hikes. Silver slid 4.3% to $57.15/oz, platinum dropped 3.1% to $1,593.17, and palladium declined 2.8% to $1,255, according to market data.

This article is for informational purposes only and does not constitute investment advice.