Strong US employment data has reignited expectations for a September Fed rate‑hike and weighed on gold in the short run. Meanwhile, discussions among global official circles over gold‑reserve safety and US‑dollar‑asset allocation are heating up. The Netherlands and France have recently adjusted arrangements for part of their gold‑reserve storage, and Norway’s sovereign‑wealth fund is reported to be considering cutting US‑Treasury exposure. This has refocused the market on whether global central banks and large institutions are accelerating asset diveRSIfication.
Gold edged lower during Monday’s (Sep 7) ASIan trading session. Markets are awaiting this week’s US Consumer Price Index (CPI) and Producer Price Index (PPI) releases for further clues ahead of the Federal Reserve’s September policy meeting.
Friday’s US August employment report beat expectations, showing a notable pickup in job growth while the unemployment rate held at roughly 4.1%. This eased earlier market fears of a rapid deterioration in the labor market and kept the possibility of a September rate‑hike on the table.
According to the CME FedWatch Tool, traders currently price in around a 60‑percent probability of a rate increase at the September 15‑16 FOMC meeting.
For gold, higher interest rates normally raise the opportunity cost of holding the metal, so prices came under pressure after the strong jobs print. Nevertheless, no heavy follow‑on selling emerged, indicating investors are waiting for this week’s inflation figures for clearer policy signals.
CPI May Act as the Real “Referee” for a September Rate‑Hike
It is widely believed that this week’s US inflation data will carry more decisive weight for the Fed’s September decision than the already‑released non‑farm payrolls report.
If both CPI and PPI continue to show stubborn price pressures, market bets for a September hike could rise further, lifting the US dollar and Treasury yields and putting fresh pressure on gold. Conversely, a meaningful cooling in inflation would strengthen the case for the Fed to keep rates unchanged. The US dollar would face downward pressure, and gold could receive support.
Gold is therefore in a classic two‑sided trading phase: on the one hand, high‑rate expectations cap upside; on the other hand, investors have not fully exited gold, showing they still maintain safe‑haven allocations against policy, geopolitical and financial‑system risks.
US President Donald Trump said on Friday that the United States might halt trade with countries running trade deficits with America if the Federal Reserve does not cut interest rates. The remarks added further uncertainty between US monetary and trade policy and complicated market debates over the future policy path.
Cooling Physical Retail Demand
At the same time, figures released by Australia’s Perth Mint show that rising gold prices have not translated into correspondingly stronger physical retail demand.
Perth Mint’s August gold‑product sales fell to a three‑month low. Sales of gold coins and cast bullion stood at roughly 24,000 ounces, down about 22 % month‑on‑month and nearly 21 % year‑on‑year.
Silver‑product sales posted an even steeper drop. August sales reached approximately 334,000 ounces, down more than 31 % from July’s 486,000 ounces and also down over 21 % year‑on‑year.
Notably, the pullback in physical sales took place amid a powerful rally in precious‑metal prices. Spot gold rose roughly 10 % across August, while silver gained more than 15 %.
This suggests that gains in precious‑metals are being driven chiefly by global investment and asset‑allocation flows rather than retail physical buying. After sharp price advances, some consumers appear to show signs of purchase fatigue.
The Netherlands and France Adjust Gold Reserves
More noteworthy than short‑term price swings is the re‑evaluation by global official institutions of where gold reserves are stored.
Reports state that De Nederlandsche Bank has recently moved part of its gold reserves out of New York, citing “geopolitical turmoil” among its considerations. France has taken similar reserve‑adjustment steps previously.
In absolute terms, the Dutch adjustment is modest relative to total global gold reserves. Still, taken together with France’s earlier moves and discussions among other large institutions about reducing US‑asset exposure, markets are questioning whether a broader asset‑diveRSIfication trend is taking shape.
Meanwhile, Norway’s USD 2.4‑trillion sovereign‑wealth fund is reported to have discussed scaling back US‑Treasury allocations, cutting government‑bond weight within its bond portfolio from around 70 % to 50 %.
If this trend peRSIsts, it could carry longer‑term implications for US‑Treasury demand and the US dollar’s status as the world’s primary reserve currency.
Market Debates Over Trump‑Policy Uncertainty
Some economists and market participants argue these asset shifts do not necessarily stem from any single specific US policy, but reflect a reassessment by international investors regarding US‑policy predictability.
Since the start of Trump’s second term, the United States has adopted a more assertive policy stance across tariffs, diplomacy, military affairs and energy. Measures include expanded trade frictions, intensified economic pressure on certain countries, and continued involvement in global geopolitical conflicts.
That has led some market observers to raise a more extreme question: whether foreign gold reserves held within the United States can always be freely accessed amid deteriorating geopolitical relations.
There is currently no evidence that the US government plans to restrict foreign‑central‑bank gold withdrawals, and most analysts regard such a scenario as low‑probability.
It is worth noting that the relevant central banks themselves have generally not framed gold relocations explicitly as a response to “asset‑seizure” risks. Instead, they emphASIze liquidity, risk diveRSIfication and crisis preparedness.
Even so, for central banks managing hundreds of billions or trillions of dollars in reserve assets, such low‑probability tail risks still need to be factored into risk assessments.
Germany’s Potential Follow‑Through Becomes a Key Watch‑Point
One country markets will watch closely going forward is Germany. Germany holds one of the largest volumes of foreign gold stored in New York, with roughly one‑third of its gold reserves located there. Domestic political voices in Germany have long called for further repatriation of gold.
Nevertheless, the Bundesbank has publicly maintained that the Federal Reserve Bank of New York is a trusted gold‑custody partner and shows no intention of large‑scale immediate gold repatriation.
Accordingly, should Germany also make material adjustments to its New‑York‑held gold reserves in future, markets would likely interpret this as a highly symbolic signal pointing to deeper shifts in global central‑bank attitudes toward reserve‑asset geography and political risks.
Gold Faces Two Distinct Pricing Regimes
In the near term, gold remains chiefly driven by US inflation, Federal‑Reserve interest rates and US‑dollar movements. Hot inflation prints this week that ultimately push the Fed to hike in September would keep gold under pressure from rising real rates.
Over a longer horizon, the re‑evaluation of gold‑storage locations by global central banks, discussions among large institutions about cutting US‑Treasury exposure, and rising geopolitical risks are reinforcing gold’s strategic value as a reserve‑diveRSIfication tool.
This means the gold market is simultaneously pricing two narratives: short‑term, “higher rates equal heavier headwinds for gold”; long‑term, “greater concerns over US‑dollar assets and geopolitical risks enhance gold’s strategic allocation appeal”.
This week’s US CPI and PPI will put the first narrative to the test. Whether more central banks follow the Netherlands and France in reshaping gold‑reserve storage may determine how far the second narrative can extend.