Gold prices under pressure and trending downward

　　Source: Futures Daily

　　On Wednesday (September 2), the domestic futures market's precious metals sector plunged collectively, with the Shanghai gold price hitting a new one-month low.

　　According to Zhan Dapeng, Director of Nonferrous Research at Everbright Futures Research Institute, in an interview with reporters, the trading logic in the precious metals sector has now shifted from "expectations of a reduced US Federal Reserve rate hike" to "expectations of a resurgence in rate hike prospects and renewed tensions in the Middle East leading to heightened inflation expectations."

　　"After Federal Reserve Chair Walsh sent a hawkish signal at the Jackson Hole Global Central Bank Annual Meeting, the market greatly increased the probability of a September rate hike by the Fed. US treasury yields and the dollar index both strengthened, and rising interest rates have directly increased the opportunity cost of holding precious metals—this has become the main reason for the recent rapid decline in precious metal prices," he said.

　　"Recently, renewed escalation in the US-Iran conflict has led to a sharp rise in oil prices, pushing up market expectations for inflation and thereby strengthening expectations for a September rate hike by the Fed," added Chen Mengyun, analyst at Shenwan Hongyuan Futures.

　　"Currently, the influence from US Federal Reserve monetary policy is temporarily outweighing gold's traditional safe-haven qualities, resulting in a divergence where heightened geopolitical risks coexist with falling gold prices," said Zhan Dapeng.

　　However, Zhan Dapeng believes that in the medium to long term, support factors for gold prices have not disappeared—concerns about the sustainability of US treasuries and subsequent damage to the dollar's credit, continued central bank gold purchases globally, and net capital inflows into gold ETFs will continue to provide a bottom-line support for gold prices.

　　Zhan Dapeng pointed out that special attention should be paid to the US Federal Reserve rate decision meeting on September 17, as well as the release of the US August nonfarm payroll data this Friday, as the strength or weakness of this data will be a key indicator in verifying the resilience of the US economy and adjusting market expectations for Fed rate hikes.

　　"If the US August inflation and employment data exceed expectations, especially if inflation rebounds or if renewed US-Iran tensions drive up oil prices again, the probability of further Fed rate hikes will continue to rise and gold prices are likely to remain under pressure. On the other hand, if Fed rate hike expectations ease, gold prices will likely experience a period of recovery," Chen Mengyun added.

Editor: Zhu Henan