Spot gold opened at $4355.62 per ounce in Wednesday’s ASIan session. Gold oscillated upward from the intraday low of $4341.23 per ounce in early ASIan trading, broke above the $4400 level in the afternoon and hit a peak of $4412.84 per ounce. At press time, gold consolidated near $4409, up 1.23% for the day.
The US Dollar Index continued weak sideways movement during the session, bottoming at 98.62 and currently at 98.71, down 0.15%. The 2-year US Treasury yield rose 0.8 bASIs points to 4.405%; the 10-year US Treasury yield climbed 1.1 bASIs points to 4.803%; the 30-year US Treasury yield edged up 0.6 bASIs points to 5.254%.
Amid escalating tensions in the Middle East, WTI and Brent crude maintained recent high-level oscillations. WTI crude stands at $94.23 per barrel, down 0.08%. Brent crude briefly topped $100 and reached $100.18 per barrel, now quoted at $99.78 per barrel, up 0.45%. US natural gas CFD is at $2.893 per million British thermal units, down 0.31%.
In equities today, China’s three major A-share indices closed mixed. The Shanghai Composite Index performed strongly while the STAR 50 Index opened higher and moved lower. At the close, the Shanghai Composite Index rose 0.28%, the Shenzhen Component Index gained 0.15%, the ChiNext Index fell 0.14%, the Beijing Stock Exchange 50 Index dropped 0.41%, and the STAR 50 Index slipped 0.69%. Total turnover across the Shanghai and Shenzhen markets reached 1.86 trillion yuan, a decrease of 104.7 billion yuan from the previous trading day.
Hong Kong’s Hang Seng Index edged higher at the open before falling, then rebounded and declined again in the afternoon. At the close, the Hang Seng Index fell 0.17% and the Hang Seng Tech Index dropped 0.76%, with total market turnover of HK$204.95 billion.
Major European stock indices opened lower this afternoon. The UK FTSE 100 opened down 0.40%, France’s CAC40 opened 0.71% lower, the Euro Stoxx 50 opened down 0.65%, Spain’s IBEX35 opened 0.92% lower, Italy’s FTSE MIB opened 0.50% down, and Germany’s DAX30 opened 0.64% lower.
In the afternoon, Shanghai Gold Exchange’s Au(T+D) closed 0.3% lower at 951.3 yuan per gram, while Ag(T+D) closed 0.25% higher at 16234.0 yuan per kilogram.
Latest data released in the session showed China’s August CPI rose 0.8% year-on-year, matching expectations and above the prior reading of 0.50%. France’s July industrial output fell 0.4% month-on-month, versus an expected 0.2% rise; the prior reading was revised from 0.10% to -0.1%.
The National Bureau of Statistics reported that in August, driven by rising international crude oil and non-ferrous metal prices that lifted prices in related domestic industries, China’s national CPI increased by 0.8%, expanding 0.3 percentage points from the previous month. The national PPI rose 3.8% year-on-year in August, also widening by 0.3 percentage points month-on-month.
In addition, US PPI and CPI data will be released over the next two evenings. These figures are critical as they will shape the Federal Reserve’s assessment of the PCE inflation trend. Analysts say the Fed’s interest rate decision next week may hinge on this week’s inflation prints, and the difference that determines policy may be only a few tenths of a percentage point; any slight deviation could alter the interest rate path.
Market expectations for the Fed swing back and forth between a rate hike and holding rates steady. Hot inflation data will reinforce the case for a hike, while signs of cooling monthly inflation may make Fed policymakers more inclined to keep rates unchanged.
Markets expect US August PPI to rise 0.4% month-on-month and 5.3% year-on-year. Headline CPI is projected to climb 0.4% month-on-month and 3.4% year-on-year, with core CPI up 0.2% month-on-month and 2.4% year-on-year. Analysts note the Fed closely monitors the Personal Consumption Expenditures (PCE) price index. CPI and PPI released this week will be used to estimate the end-of-month PCE reading, helping policymakers gauge inflation trends. If the core PCE monthly increase lands around 0.21% or 0.22%, the Fed will likely stay on hold; a reading of 0.23% or 0.24% would raise odds of a rate hike.
Fed officials have shown clear division recently. Hawkish policymakers such as Cleveland Fed President Hammack continue to advocate rate hikes, while Fed Governor Waller and New York Fed President Williams lean toward data-dependent decisions. Meanwhile, Trump threatened last Friday that he may cut trade ties with countries running trade surpluses with the US if the Fed does not lower interest rates.
Media analysis suggests that if the Fed raises rates amid an energy price shock as international oil prices rise, it may repeat the most damaging policy mistake before the 2008 financial crisis: mistaking price gains from energy supply shocks for economic overheating and ignoring that high energy prices erode household purchASIng power and drag down economic growth.
Current policy signals from the Fed and European Central Bank resemble the narrative before the 2008 crisis: tightening financial conditions and suppressing demand amid an energy shock. The ECB has already delivered a rate hike, becoming the first major central bank to raise rates over inflation triggered by the Iran conflict.
On the daily gold chart, prices stabilized and rebounded today, touching the 5-day moving average and consolidating around the $4400 level. The near-term resistance sits near the 10-day moving average at $4440, and key support is at the 100-day moving average of $4340. Among daily indicators, MACD positive momentum continues to shrink and the RSI hovers near the 50 level.
On the 1-hour gold chart, the BOLLinger Bands are gradually flattening, and gold rebounded to trade near the upper band. Short-term moving averages EMA5 and EMA10 have turned bullish. MACD negative momentum has shrunk toward the zero line, and RSI has risen to around 54. Evening short-term trading outlook: gold is expected to consolidate mainly within the $4340-$4440 range. A breakout higher targets $4460-$4480 or near $4500; a breakdown lower targets $4325-$4310 or near $4300.
Key economic data and events to watch tonight:
20:15 US ADP employment change for the week ending August 22
23:00 US Treasury announces maximum amount for bond buyback program
00:00 next day EIA releases monthly Short-Term Energy Outlook report
01:00 next day ECB President Lagarde delivers speech
01:00 next day US 10-year Treasury auction yield for the week ending September 9
01:00 next day US 10-year Treasury auction bid-to-cover ratio for the week ending September 9
04:30 next day US API crude oil inventories for the week ending September 4
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