【TMGM Financial Recap】Fed Rate Hike Bets Plunge, Gold Prices Stabilize With A Slight Rebound, Market Awaiting The Nonfarm Payroll Showdown!

Spot gold edged up on Thursday, which on the surface was a direct response to U.S. inflation data coming in below expectations in August. The market quickly lowered its bets on a Fed rate hike in October, from 69% a week ago to 25%. However, this rebound is far from smooth. High U.S. Treasury yields, a strong dollar, soaring oil prices, and ongoing Middle Eastern geopolitical risks have all created a complex bull-bear tug-of-war. Whether gold can truly stabilize remains to be seen, and the market is awaiting guidance from the U.S. September nonfarm payroll report. 

The core catalyst for this slight rise in gold prices came from the further fermentation of the unexpected cooling in U.S. inflation data and dovish remarks from Federal Reserve officials. The inflation reading in August came in below expectations, and price pressures from the previous month were also revised downward. This result directly shook market confidence in the Fed's aggressive rate hikes. Investors quickly adjusted their expectations, believing the probability of a rate hike in October had dropped significantly. Meanwhile, public statements from top Fed officials further reinforced this shift. 

For gold, lowered rate hike expectations mean the opportunity cost of holding non-yielding assets temporarily decreases, providing direct support. It is precisely these lowered rate hike expectations that have supported the precious metals market. HSBC has lowered its forecast for the average gold price in 2026 to $4,490 per ounce, and to $4,825 per ounce in 2027, judging that gold prices may face further short-term pressure but may be near the bottom. The bank also expects that if gold prices approach or fall below $4,000, central banks around the world may resume gold purchases due to price appeal. These views inject a hint of medium- to long-term optimism into the market. 

Although inflation and policy expectations have shifted to favor gold, the sharp volatility in the bond market has provided a strong hedge. The yield on the 10-year U.S. Treasury note briefly hit its highest level in 24 years, even recording the largest quarterly gain since 1994. Although Treasury prices rebounded on Thursday and yields fell, the overall trend of running at high levels has not fundamentally changed. High yields directly increase the opportunity cost of holding gold, while the synchronized strengthening dollar makes dollar-denominated gold more expensive for non-U.S. investors.

Meanwhile, the sharp fluctuations in the international oil market have introduced new uncertainties for gold. Crude oil closed up more than 4% on Thursday, directly triggered by major Asian refineries suspending oil exports and news that the U.S. may deploy a third aircraft carrier and up to 10,000 troops to the Middle East. Trump's tough stance on Iran further intensified market tensions. 

Market Insight:

Overall, the gold price rebound is more a technical reaction to short-term policy expectations corrections than confirmations of a trend reversal. Cooling inflation and dovish signals from the Federal Reserve offer breathing room, but high yields, a strong dollar, oil price pressures, and geopolitical uncertainty still pose significant obstacles. The market is caught in a tug-of-war among multiple forces.