The Fed may kick off a rate hike in September. The US Dollar and US Treasury yields kept climbing. Spot gold surged intraday to around $4310 overnight before retreating, and finally closed at $4293.97 per ounce, down 0.11%; spot silver closed at $63.608 per ounce, up 0.70%.

    Spot gold opened at $4294.22 per ounce in Wednesday's ASIan session, hitting a low of $4275.39. Gold staged an intraday rally to a high of $4315.65 in early ASIan trading. At press time, gold was trading near $4314, up 0.47% for the day.

    Reviewing the European and US market action overnight, the US Dollar Index consolidated near its daily high and peaked at 99.69, eventually closing at 99.63, up 0.16%. The 2-year US Treasury yield rose by 0.2 bASIs points to 4.664%; the 10-year US Treasury yield climbed 1.3 bASIs points to 5.004%, marking its highest level since 2007; the 30-year US Treasury yield increased by 2.2 bASIs points to 5.368%, also a 2007 high.

    WTI and Brent crude oil pulled back briefly before extending gains. WTI crude closed at $105.58 per barrel, up 3.78%; Brent crude settled at $108.58 per barrel, up 2.40%; US natural gas CFD closed at $3.071 per MMBtu, up 1.086%.

    The three major US stock indices closed lower. The Dow Jones Industrial Average fell 328.63 points, or 0.63%, to 52092.57. The S&P 500 lost 34.20 points, or 0.45%, to 7585.78. The Nasdaq Composite dropped 204.84 points, or 0.78%, to 25981.57.

    Major European stock markets ended lower. Germany's DAX 30 closed flat at 25415.84. UK FTSE 100 fell 0.41% to 10653.56. France CAC 40 declined 0.34% to 8090.28. EURO STOXX 50 dropped 0.36% to 6237.65. Spain IBEX 35 edged down 0.03% to 19557.44. Italy FTSE MIB fell 0.20% to 51526.50.

    Gold T+D on the Shanghai Gold Exchange closed up 0.18% at 929.73 yuan per gram overnight; Silver T+D closed 0.9% higher at 15546.0 yuan per kilogram. In early Wednesday trading, Gold T+D dipped 0.27% to 925.55 yuan per gram; Silver T+D opened 0.9% higher at 15546.0 yuan per kilogram.

    Holdings of SPDR Gold Trust, the world’s largest gold ETF, rose by 2.852 tonnes from the previous session to 1050.277 tonnes. Holdings of iShares Silver Trust, the world’s largest silver ETF, decreased by 25.29 tonnes to 15266.31 tonnes.

    The PBOC set the central parity rate for RMB today. USD/CNY was set at 6.7628, down 42 pips (RMB appreciation). EUR/CNY at 7.7762, down 49 pips. HKD/CNY at 0.8621, down 6 pips. GBP/CNY at 9.0830, down 162 pips. AUD/CNY at 4.8043, down 48 pips. CAD/CNY at 4.8391, down 62 pips. 100JPY/CNY at 4.3419, down 173 pips. CNY/RUB at 12.5420, down 301 pips. NZD/CNY at 3.8767, down 166 pips. CNY/MYR at 0.60426, up 6.7 pips. CHF/CNY at 8.2367, down 159 pips. SGD/CNY at 5.2951, down 117 pips.

    The People’s Bank of China conducted 110 billion yuan of 7-day reverse repos via fixed-rate quantity bidding, fully meeting demand from primary dealers. It also launched 600 billion yuan of overnight reverse repos.

    Latest data released overnight: US ADP employment change for the week ending August 29 was 16,250, compared with previous reading of 12,000. Canada July wholesale sales month-on-month at 0.3%, forecast -0.5%, prior 2.80%. US New York Fed Manufacturing Index for September printed at 7.6, forecast 15, prior 20.6.

    US Treasury Secretary Bessent defended the Trump administration’s exchange rate intervention, Treasury buybacks and AI policies under intense questioning during a congressional hearing. Faced with questions over inflation, living costs and the Iran war, he blamed the Biden administration. Several protesters stood up during the hearing, demanding an end to sanctions and war against Iran. Bessent had to pause his opening remarks, and the protesters were escorted out.

    Analysts noted the hearing comes at a sensitive juncture. US 10-year Treasury yields have climbed to the highest level since 2007, and bond markets across major global economies are under selling pressure. The surge in Treasury yields stems from multiple factors: rising oil prices, market expectations for a Fed rate hike this week, capital competition from AI spending, and worries over US fiscal health.

    US President Trump stated that the Supreme Court’s poor tariff ruling will cost the US trillions of dollars for many years to come. Similarly, the birthright citizenship ruling is a total disaster for America and has already led to widespread corruption over citizenship.

    Trade disputes between the US and Canada continue to escalate. Canada’s retaliatory tariffs on US goods have been in force for several days, and US 50% tariffs on more than one hundred categories of Canadian products have also taken effect. Canadian Prime Minister Carney said Canada will launch consultations with the EU next month to build a security and economic alliance.

    The war between the US and Iran has lasted more than half a year. The fiscal cost of the conflict has reached $38 billion, and if fighting continues, the US will incur an additional roughly $3 billion in costs every month. The war has pushed up energy prices and inflation, depleted key US ammunition stockpiles and further strained federal finances. The economic toll of the war has become a major pressure forcing policy adjustments.

    It is reported that top military commanders from the US, Israel and several Arab states held a secret meeting last week to discuss the war with Iran and regional tensions. It marks the first such gathering since the US and Israel went to war with Iran more than six months ago, and a rare face-to-face meeting between senior military officials of Israel and Gulf states without diplomatic ties.

    Russia’s Foreign Ministry said Russia warned foreign diplomats in May to leave Kyiv because Russia was striking Ukraine’s military-industrial complex and they should soberly assess the risks.

    Ukrainian President Zelensky said yesterday Ukraine attacked an oil refinery in Syzran, Russia, a drone production facility in Taganrog and a drone staging and launch site in Ryazan region. Some unnamed targets in the Black Sea area were also hit.

    From the daily gold chart, gold rebounded near $4261 yesterday. Long lower wicks formed over the past two sessions, showing buying interest at lows. Gold has rallied intraday toward the 100-day moving average today, and fierce battles between bulls and bears are expected around this level. On daily indicators, the MACD histogram keeps shrinking near the zero line while RSI flattens around the 45 level.

    On the 1-hour gold chart, gold rebounded intraday toward the upper BOLLinger Band. Short-term moving averages EMA5 and EMA10 formed a bullish arrangement. The MACD histogram has just turned positive and RSI climbed to around the 60 level. For intraday trading strategy, gold is expected to trade within the 4275-4335 range. A breakout to the upside would target 4345-4355 or 4365. To the downside, supports sit at 4265-4260 or 4253.

    Key economic data and events to watch today:

    14:00 UK August CPI MoM

    14:00 UK August RPI MoM

    15:00 European Commission President von der Leyen delivers State of the Union address

    15:00 Canadian Prime Minister Carney attends von der Leyen’s speech

    17:00 Eurozone July Industrial Production MoM

    20:30 US August Retail Sales MoM

    20:30 US August Import Price Index MoM

    22:00 US September NAHB Housing Market Index

    22:00 US July Business Inventories MoM

    22:30 US EIA Crude Oil Stocks for week ending Sep 11

    22:30 US EIA Cushing Crude Oil Stocks for week ending Sep 11

    22:30 US EIA Strategic Petroleum Reserve Stocks for week ending Sep 11

    01:30 (next day) Bank of Canada releases Monetary Policy Meeting Minutes

    02:00 (next day) Fed FOMC releases interest rate decision and Summary of Economic Projections

    02:30 (next day) Fed Chair Walsh holds monetary policy press conference

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