Last week's focus was on Federal Reserve Chairman Kevin Warsh's speech at the Jackson Hole symposium. He made no commitment to forward guidance or provide a response function for monetary policy. Instead, Warsh used the speech to comprehensively elaborate on his thinking on central bank governance. In his speech, Warsh did not mention the Treasury repurchase program recently announced by Treasury Secretary Scott Bessant. This move seems to conflict with Warsh's desire for less government intervention in the market.

On Friday, the market was torn between three forces: Iran signaled an "all or nothing" stance, but the US stated that the Strait of Hormuz was "open"; Warsh's first Jackson Hole speech might not provide forward guidance, but the market believed his path could only lead to a hawkish stance; and energy supply disruptions have lasted for six months, with refined oil price inflation transmitting to core prices.

The US dollar index rose 0.55% on Friday, closing at 99.66, marking its largest single-day gain since June 17th, while its weekly gain was nearly 0.9%, its best performance in 10 weeks. The immediate trigger for this strong rebound was Federal Reserve Chairman Kevin Warsh's hawkish remarks at the Jackson Hole symposium, but the deeper context lies in the continued above-target inflation in the US (July PCE up 3.7% year-on-year) and the resilience of the labor market, leading the market to reassess the Fed's policy path.

Gold prices fell more than 3.18% on Friday as market participants digested the hawkish comments from Fed Chairman Kevin Warsh at Jackson Hole. Rising US Treasury yields and a generally stronger dollar were the two main drivers of the sudden weakness in precious metals. Gold/dollar is currently trading at $4,445 after hitting a high of $4,629.

Last Week's Market Performance Recap:

Fed Chairman Kevin Warsh expressed concern about current inflation trends earlier today, causing US stocks to fall. Cloud service providers (CSPs) bucked the trend, rising while the optical communications sector saw the largest declines.

At the close, the Dow Jones Industrial Average fell 0.02% to 53,559.99 points; the Nasdaq Composite Index fell 0.52% to 26,402.42 points; and the S&P 500 Index fell 0.25% to 7,711.76 points.

Last week, gold prices fell sharply in late U.S. trading on Friday, influenced by Federal Reserve Chairman Kevin Warsh's hawkish stance at the Jackson Hole symposium, which reinforced his anti-inflationary stance. Warsh's hawkish remarks quickly boosted expectations of a September rate hike by the Fed, causing short-term Treasury yields and the dollar to strengthen in tandem, triggering a concentrated sell-off in the precious metals market. At the close, spot gold was at $4,454.50 per ounce, a drop of $147.36, or 3.18%, on the day.

Silver prices fell back to around $66.40 per ounce on Friday as investors digested Fed Chairman Kevin Warsh's hawkish comments. In his first major speech since becoming chairman in May, Warsh warned that inflation had not slowed significantly and said policymakers needed to see clearer evidence that underlying price pressures were easing, otherwise the central bank still had "work to do."

The dollar index rose 0.55% on Friday to close at 99.66, its biggest one-day gain since June 17, while its weekly gain was nearly 0.9%, its best performance in 10 weeks. The immediate trigger for this strong rebound was Fed Chairman Warsh's hawkish remarks at the Jackson Hole symposium, but the deeper context was persistently high U.S. inflation (July PCE 3.7% year-on-year) and a resilient labor market, prompting the market to reassess the Fed's policy path.

The euro fell 0.6% against the dollar to 1.1581, hitting its lowest level since August 19 during the session, and fell 0.81% for the week, ending a four-week winning streak. The euro's weakness was not only pressured by a strong dollar but also reflected relatively weak European economic data and concerns about rising energy import costs due to the Middle East situation. The dollar rose 0.45% against the yen to 160.10, marking its third weekly gain in four weeks. Despite Tokyo's core CPI accelerating for the third consecutive month in August (strengthening the case for a Bank of Japan rate hike), the US-Japan interest rate differential continued to dominate the exchange rate, with the Bank of Japan's decision to keep rates unchanged in July continuing to drive carry trades.

Continuing its correction, the pound fell 0.47% against the dollar to 1.3530. In fact, the pound faced increasing selling pressure against the dollar amid further dollar strength, particularly driven by Chairman Warsh's speech at the Jackson Hole symposium and the revised annual US non-farm payrolls (-79K). Ending a four-week winning streak, the pound was pressured by the risk of a UK recession and post-Brexit trade tensions. The Australian dollar fell 0.30% against the US dollar on Friday, trading around 0.7170 at the time of writing, after earlier in the day reaching 0.7206, its highest level since mid-May. The Australian dollar weakened as the dollar regained demand following hawkish comments from Federal Reserve Chairman Kevin Warsh.

Oil prices closed lower on Friday, marking a significant weekly decline. Brent crude fell nearly 6% this week, settling at $88.24 per barrel; WTI crude fell 4.11% this week, settling at $82.80 per barrel, marking its second consecutive week of weakness. From an investment strategy perspective, the market is pricing in the "most optimistic scenario" (reopening of the Straits + Fed rate hike + increased Venezuelan production), but any failure to meet these expectations could trigger a sharp correction.

The Bitcoin market reacted relatively restrainedly to Warsh's speech. Bitcoin briefly rose to $81,455, breaking above $81,000 for the first time since May 15, before falling back to a low of $76,892.57, currently still down nearly 3%. Despite significantly increased bets on a Fed rate hike, Bitcoin did not experience a rapid plunge similar to that seen in gold.

U.S. Treasury yields rose across the board, with the 10-year Treasury yield climbing to 4.73%, as Federal Reserve Chairman Kevin Warsh warned that inflation had not slowed significantly, suggesting policymakers may still have "work to do" to restore price pressures to the Fed's 2% target.

Market Outlook This Week:

This week (August 31 - September 5) will be a crucial period for global financial markets, marked by a flurry of policy and economic data releases.

With the Fed's decision approaching, from top-level global political and economic gatherings such as the G20 Finance Ministers and Central Bank Governors meeting and the SCO summit, to manufacturing PMIs from China and the U.S., inflation in Europe and the U.S., and the highly anticipated U.S. non-farm payroll report, every variable could potentially reshape market expectations.

Investors need to prepare their asset allocation in advance to properly manage the risks and opportunities brought about by the sharp fluctuations.

The G20 Finance Ministers and Central Bank Governors meeting (running until September 1) will set the tone for international monetary policy coordination and the macroeconomic outlook.

Meanwhile, the 2026 SCO Heads of State Council Meeting will be held, highlighting geopolitical and regional economic cooperation.

The Bank of Canada will announce its latest interest rate decision (the market widely expects it to maintain the overnight rate at 2.25%), followed by a press conference to signal its future monetary policy roadmap.

Risk Warning: Triple Convergence of Geopolitical, Policy, and Data Anomalies

In addition to the aforementioned core economic data and routine meetings, investors should pay special attention to the following four details and potential risks in next week's trading:

A Dramatic Shift in Non-Farm Payrolls Amid "Low Hiring, Low Turnover": The current US labor market is exhibiting a highly sensitive equilibrium. If non-farm payrolls fall significantly below expectations again or the unemployment rate triggers the "SAM Rule" warning, market concerns about a US recession could rapidly escalate, leading to a sharp correction in US stocks and a plunge in US Treasury yields.

The Foreshadowing Effect of Frequent Speeches by Central Bank Officials: A flurry of statements from Federal Reserve Governor Waller, Cleveland Fed President Hammarck, and senior Bank of Canada officials indicate a sensitive policy window. If any official signals a strong shift towards hawkish or dovish stance, key currency pairs in the foreign exchange market (such as EUR/USD and USD/CAD) are highly likely to undergo dramatic reshaping in the short term.

International geopolitics and high-level summits are intertwined: During the convening of the G20 and SCO summits, marginal changes in global trade frictions, supply chain restructuring, and geopolitical situations (such as Russia-Ukraine and the Middle East) could intensify risk aversion in the short term, driving gaps in safe-haven assets such as gold, the Japanese yen, and the US dollar.

Commodity supply and demand dynamics: Combined with the slowing inflation trend in the US and Europe and API/EIA inventory changes, commodities such as crude oil are extremely sensitive to weak demand. Investors should be wary of the risk of a trend-breaking breakdown in crude oil prices after the release of PMI data from China and the US.

Conclusion:

Volatility will increase significantly next week. Early Friday morning (September 4th), Hamack, a 2026 FOMC voting member and President of the Cleveland Federal Reserve, will deliver the opening remarks at the "Fed Community" event, providing an updated explanation of his policy stance.

Tonight will see the week's most crucial "super storm"—the US August non-farm payrolls and unemployment rate data. Given last month's significantly weaker-than-expected non-farm payrolls data and the resulting volatility in global assets, this month's data will be closely watched by the market.

Market concerns about a potential collapse in dollar confidence have led to calls for reducing US Treasury holdings and allocating more to gold.

While central banks' large-scale gold purchases in recent years have largely not been opposed to the dollar, market concerns persist about a possible collapse in dollar confidence. Data shows that the euro gained nothing from the dollar's outflow of reserves, while the Chinese yuan gained about a quarter, with the remainder flowing to non-traditional currencies such as the Australian dollar, Canadian dollar, and South Korean won. I personally believe the Federal Reserve should reduce its bond holdings and increase its allocation to alternative assets such as gold, and that the US's bet on stablecoins may be a miscalculation. This week, newly appointed Federal Reserve Chairman Warsh will make his first appearance at the Jackson Hole Economic Symposium.

This scholar, who has authored authoritative histories of international monetary flows, stated, "Personally, I don't believe gold will once again become a core component of the international monetary and financial system." However, he has indeed changed his mind on another matter and can pinpoint the exact day of that change. He said, "I'm increasingly worried about a contingency: that market confidence in the dollar will collapse before alternative currencies can emerge. This concern begins on April 2, 2025, America's Emancipation Day."

This is significant because Eisengreen has been a level-headed observer in this debate for most of his career. While others proclaimed the dollar's decline, he focused on the slowly declining figure: the dollar's share of global foreign exchange reserves is falling by about 0.5 percentage points annually, from over 70% at the turn of the century to less than 60% today.

Who will take the territory ceded by the dollar?

The International Monetary Fund has not published details of the currencies absorbing the dollar's share, forcing Eisengreen and his co-authors to dig through the annual reports of approximately 80 central banks. The results were surprising: "The euro didn't gain a single share of the reserves the dollar lost in the 21st century, the Chinese currency gained about a quarter, and the remaining three-quarters were taken by these non-traditional reserve currencies." He was referring to the Australian dollar, Canadian dollar, Singapore dollar, New Zealand dollar, Nordic currencies, and South Korean won, "all currencies of small, open, well-governed countries that generally adhere to inflation targeting."

Why are central banks rushing to buy gold?

Eisengreen traces the gold-buying spree back to the 2008 financial crisis, rather than disputes with Washington. He stated that most emerging market central banks did not inherit gold reserves, starting from a very low point. He said, "I think this is largely a structural catch-up, and it has been until recently. I'm not quite sure how to interpret this recent wave of gold purchases. It may now be a combination of structural catch-up and growing concerns about the dollar. We've also heard rumors of unusual intervention by the US Treasury in this market."

Bringing gold home isn't necessarily about sanctions. France, Germany, and the Netherlands returned their gold more out of political than financial pressure. What they gave up was the ability to use gold as collateral in financial transactions, to lend it out, and to earn interest. Therefore, those who actually do this are often countries with surplus reserves; "central banks are doing this with their eyes open." Eisengreen argued for the limitations of gold in the most rigorous way. Currency needs to fulfill three functions: pricing, payment, and preservation of value, while gold can only fulfill one.

Reducing Bond Holdings: The Signal is Already Clear

Eisengreen pointed directly to the key: "US Treasuries have always been considered the cornerstone of a 60/40 portfolio. If they are no longer safe and are highly correlated with stocks, then bonds should be reduced and alternative assets such as gold should be allocated instead." "But he declined to give a specific percentage: 'Giving advice of 5% or 10% is beyond my rank. If I could calculate it accurately, I wouldn't be a professor; I'd be a hedge fund manager.' He added that gold is already embedded in the system, 'All fully diversified global investors should have commodity exposure in their portfolios.'

The Fragility of the US Treasury Market and Wrong Bets

Eisengreen's most pointed comments had nothing to do with gold. Washington helped support the yen last month using euros instead of dollars for settlement; it also pushed the Federal Reserve to expand its tools, allowing the Bank of Japan to pledge US Treasury bonds for cash without having to sell them; and a few days ago, the US Treasury doubled its long-term bond repurchase program.

He asserted that these operations had not achieved the desired effect: 'I don't think these tricks can fool the market; they all indicate that the Treasury and even the White House are concerned about the fragility of the US Treasury market.' He also made a unique association: 'If the US government is unwilling to allow foreign authorities to actually use the dollar, it means that dollar liquidity is not as abundant as imagined, and both government and private investors will notice.'" Regarding the historical outcomes of central banks being forced to buy bonds, he bluntly stated, "Nothing good has ever happened afterward: financial repression, forcing banks and other institutions to purchase government bonds, and compelling central banks to artificially lower interest rates—none of these have appeased international investors."

Eisengreen also believes that the US may have bet on the wrong technology. The GENIUS Act, signed in July 2025, is the first federal law covering payment stablecoins, requiring issuers to back them one-to-one with cash, deposits, and short-term Treasury bills, disclose reserves monthly, and accept independent audits. This effectively hands over the digital future of the dollar to private companies holding US Treasury bonds. Europe and China, on the other hand, are moving in the opposite direction, developing central bank digital currencies. He stated, "In the long run, betting on central bank digital currencies may be right, while the US, betting on private stablecoins, may be wrong."

Conclusion:

Eisengreen admitted to making mistakes: "In 2011, I wrote 'Excessive Privilege,' predicting that the dollar would give way to the euro and the Asian yuan. I was wrong—funds did not flow to the euro and the Chinese currency, but rather to those non-traditional reserve currencies." He quoted Keynes: "What do you do when the evidence contradicts your judgment? He said, I change my mind. What about you, investor?"

This week, newly appointed Federal Reserve Chairman Kevin Warsh will deliver his first keynote address since taking office in Jackson Hole. The annual meeting's theme is financial innovation and payments, undoubtedly bringing Eisengreen's questions directly to the Fed's attention.

Gold's Rally Still Faces Inflation and Interest Rate Hike Risks

With recovering investment demand and the US Treasury doubling its long-term Treasury bond buyback program to at least $4 billion as major catalysts, gold prices are surging and approaching above $4,700 per ounce, driven by both fiscal risks and concerns about currency devaluation strengthening gold's safe-haven appeal. On the other hand, persistently high inflation and expectations of a potential Fed rate hike mean that the upward trend in gold prices is unlikely to be smooth.

Fiscal Risk Ignites New Momentum, Treasury Bond Purchases as Catalyst

Fiscal risks have injected new momentum into gold, pushing prices near $4,700 an ounce. This rally stemmed from the U.S. Treasury's decision to increase its purchases of long-term government bonds, raising the maximum size of 10- to 30-year repurchase operations from $2 billion to at least $4 billion, according to Treasury Secretary Scott.

The impact of this move on the bond market was short-lived, with long-term yields quickly recovering most of their losses. However, gold continued to strengthen. Gold's resilience suggests that this rally is not simply a reaction to declining yields. The prospect of larger-scale Treasury repurchases has refocused attention on government borrowing and fiscal credibility, and has also reignited market concerns about currency devaluation, thus strengthening gold's appeal as a store of value.

ETF inflows and Western investors returning to the market

A weakening dollar and declining short-term yields are fueling the gold rebound, while weaker U.S. economic data has reignited market expectations that the Federal Reserve may begin cutting interest rates in 2027. Improved demand for ETFs is another positive sign. According to data from the World Gold Council, global gold ETFs attracted $3 billion in inflows in July, with holdings increasing by 23 tons. "The recovery momentum of July continued into August, with institutionally tracked funds adding approximately 18 tons of gold in a single day on Thursday (August 20th), marking the strongest single-day increase in nearly a year.

Central Bank Purchases Continue to Support Gold

During the months-long consolidation period for gold, central bank demand remained strong. Net purchases reported in June reached 51 tons, bringing the total for the first half of the year to 102 tons, with Poland and major Asian countries leading the buying spree. Official buying is expected to continue supporting the market, but whether gold prices can rise further will increasingly depend on whether Western investors can maintain this rekindled interest.

The Shadow of Inflation Lingers, Jackson Hole in Focus

This nascent gold rally still faces headwinds, with inflation concerns being the primary factor. Rising energy prices are exacerbating price pressures in the US, potentially keeping monetary policy restrained for a longer period. The minutes of the Fed's July meeting showed that some policymakers favored an immediate rate hike, while others were prepared to support further tightening given persistently high inflation." Mandy lists this week's Federal Reserve annual Jackson Hole symposium as a key focus for the market. Any signs that policymakers are more willing to raise interest rates could push up yields and the dollar. A greater shift in policy focus towards economic growth or financial stability would be more favorable for gold.

Risks Tied to the Upside, Market Bullish on Year-End Gold Prices

The upside risks to the year-end gold price outlook are increasing. Market forecasts of $4,150 per ounce (average price) in the fourth quarter are based on the assumption that persistent inflation will keep US monetary policy restrained and prevent yields from falling further. However, a rebound in ETF buying, a weaker dollar, and growing fiscal concerns are creating increasingly apparent upside risks to the outlook.

The gold pullback appears to have bottomed out. The rebound in ETF buying, coupled with the resilience of gold prices despite high yields, suggests a more solid foundation for this recovery. However, whether gold prices can rise further will depend on the continued accumulation of investment demand and how the Federal Reserve responds to persistent inflation.

Conclusion Gold has once again become the focus of the market, supported by multiple factors including the Treasury's expanded bond-buying program, concerns about the fiscal deficit, and continued gold purchases by the central bank. However, inflationary pressures and the uncertainty surrounding the Federal Reserve's policy remain a "sword of Damocles" hanging over gold prices. With the Jackson Hole symposium approaching, the Fed's policy signals will be a key variable determining the next direction of gold prices.

The US-Iran conflict may be on the verge of a reversal! The US is eager to end the war, putting downward pressure on oil prices at their high levels. The geopolitical situation in the Middle East has recently escalated, with the core of the US-Iran rivalry shifting from short-term military friction to a long-term, precise economic war of attrition. The Strait of Hormuz, a vital global energy chokepoint, is currently experiencing significant discrepancies in oil navigation data, with official and market statistics showing a large divergence.

This is compounded by the implementation of a new round of extreme US sanctions and Iran's strong countermeasures. As previously discussed, as long as the war of words continues and the conflict persists, a major confrontation is unlikely. Both sides have successfully diverted attention from domestic conflicts to media rhetoric, and recently, Iranian peace advocates have been actively advocating for an end to the war.

Shifting Focus: US Launches Comprehensive Economic Isolation Sanctions

While the military standoff has cooled, the US-Iran rivalry has officially shifted to a full-scale economic war. On August 24th, local time, US Treasury Secretary Bessenter held a press conference announcing a new round of "economic isolation" sanctions against Iran, significantly escalating the pressure.

This round of sanctions covers five core areas: aviation, digital assets, gold trading, shipping, and high-tech industries.

(Same) The US suspended multiple compliance licenses related to Iran, covering cross-border education services, personal cross-border remittances, and people-to-people exchanges such as sports and academic exchanges. It also added over 60 Iranian entities, individuals, and vessels to its sanctions list, precisely targeting Iran's core supply chains in nuclear and missile technology, cyber operations, and oil trade.

The US further threatened to completely cut off all potential revenue sources for the Iranian Islamic Revolutionary Guard Corps, and stated that a large financial institution would be sanctioned by the end of this week for its business dealings with Iran.

Iran's Strong Countermeasures: Undeterred by Sanctions, Rejecting External Pressure

Faced with the US's extreme economic pressure, the Iranian government responded strongly across all dimensions, showing no signs of backing down. The Speaker of the Iranian Parliament publicly stated that the international community has long recognized the futility of US sanctions rhetoric, and no one believes the US threats.

The Iranian military's stance was even more resolute. The Commander-in-Chief of the Iranian Armed Forces, Khatami, publicly and forcefully declared that even after generations of struggle, Iran will never yield to external pressure and will resolutely thwart any attempts by the enemy to suppress it. Any attempt to alter Iran's territory or contain its development will pay a heavy price.

Even though Iran is currently facing economic and livelihood pressures such as fuel shortages, Tehran continues to maintain a tough stance of confrontation.

A window of opportunity for mediation has emerged: Pakistan leads the mediation, buffering the escalation of conflict.

While geopolitical tensions continue to escalate, regional diplomatic efforts are proceeding simultaneously, providing a buffer to de-escalate tensions. Pakistan's Interior Minister publicly stated that negotiations between Pakistan and high-ranking Iranian officials have made significant progress.

The Pakistani military also issued a statement that Army Chief of Staff Munir has completed comprehensive and in-depth talks with Iran. The core focus of both sides was on pragmatic measures to avoid conflict and prevent further escalation of the regional situation, injecting uncertainty into the US-Iran confrontation.

Market sentiment is moderate: Oil prices show no panic, supply and demand expectations are cautious.

Despite the tense geopolitical situation in the Strait of Hormuz and ongoing data disputes, the current oil market has not fallen into extreme panic, with overall sentiment remaining relatively restrained. Brent crude futures are currently stable around $90 per barrel, a slight increase from peacetime levels, but a significant drop from the highs at the beginning of the conflict.

The easing of market sentiment is directly reflected in the futures-spot price spread: the spot premium, which was as high as $36 per barrel at the beginning of the war, has narrowed rapidly to less than $6 in recent months, reflecting a significant easing of short-term emergency supply pressure.

The price of Dubai crude, the benchmark oil price in the Gulf, has also fallen from its extreme high of $160/barrel at the end of March to around $97/barrel. Market movements indicate that the trading market has not accepted the optimistic statement from the US regarding "full recovery of shipping capacity," nor has it over-bet on the risk of a complete disruption of supply through the Strait.

The navigation game is becoming increasingly complex: multiple parties are diverting traffic, diluting the effect of a blockade.

The current navigation situation in the Strait of Hormuz presents a complex situation of checks and balances among multiple parties, and is not simply a matter of US-Iran relations. A two-way confrontation. For months, the US military has established a protective shipping lane on the Omani side of the Strait of Hormuz, actively guiding oil tankers through in an attempt to weaken Iran's control over the strait and stabilize global oil supplies.

To circumvent the risks of the strait, Saudi Arabia and the UAE have built a trans-desert land-based oil pipeline, transferring millions of barrels of crude oil daily to the Gulf of Oman and the Red Sea, bypassing the Strait of Hormuz blockade. Data shows that since August, about one-third of ships transiting the strait have chosen the Iranian-controlled northern route, further diversifying market capacity and continuously mitigating the impact of geopolitical risks on supply.

Conclusion

Previous articles have repeatedly emphasized that the US debt crisis makes it difficult for the US to withstand further increases in oil prices. Meanwhile, the oil price surge caused by the US-Iran conflict and military spending are also significant factors contributing to the recent US debt crisis.

In the short term, oil prices will continue to fluctuate between "geopolitical risk premium" and "real supply easing." Subsequent physical shipments and Asian port arrival and unloading data will be the core key to dispelling market confusion and guiding oil price trends. That is, if oil prices fall, Iran will likely speak out, while if oil prices rise, the United States will speak out. The two sides are currently still at an impasse.

Geopolitically, on one hand, the US continues to escalate financial sanctions, attempting to cripple the economic lifeline of the Iranian Revolutionary Guard; on the other hand, Iran holds the key to the Strait of Hormuz and has signed cooperation agreements with neighboring countries, responding forcefully. Currently, the overall situation in the Gulf is a complex one of diverting resources from surrounding areas and multiple countries exercising independent navigation rights.

The Ministry of Finance is planning to use nearly 1 trillion yuan in emergency funds to buy long-term bonds. Will Walsh undermine this plan? Oil, gold, and currency have already expressed their opinions!

Last week, the financial markets were characterized by three main contradictions: US Treasury yields were at multi-year highs, gold regained technical momentum, and oil prices remained highly volatile and directionless. The US Treasury attempted direct intervention in long-term interest rates, but the market was more wary that this could be close to "fiscal monetization." Federal Reserve Chairman Warsh's first speech at the annual meeting on Friday became a key point of interest.

Early last week, long-term US Treasury yields fell slightly amid rumors that the Treasury might use nearly $1 trillion in cash to support repurchase agreements. Gold prices had already broken above the 200-day moving average before this news, with safe-haven demand and concerns about the dollar's credibility rising simultaneously. Crude oil fell due to unresolved details of sanctions, but traffic volume around the Strait of Hormuz remained low. The Bessant press conference and Friday's Jackson Hole meeting are key short-term risks.

Treasury buybacks meet TGA: The signal is stronger than the amount.

Treasury Secretary Bessant doubled the size of long-term "non-benchmark bond" buybacks to at least $4 billion, and hinted at more. The market initially expected increased short-term Treasury bond issuance, but mainstream overseas financial media, citing officials, reported that nearly $1 trillion from the general account might be used. If TGA cash is indeed used, it's equivalent to not increasing net supply but directly reducing long-term supply pressure. The amount is small relative to existing debt, but traders will price in the "Treasury's willingness to manage returns." "Yield curve." US Treasuries benefit in the short term. The risk lies in the possibility of a rapid pullback at the long end if implementation falls short of expectations.

Gold rises above the 200-day moving average: Afternoon's events are not necessarily tonight's.

Gold prices rose above the 200-day moving average last week, the first time since June. Previous drivers were a weaker dollar and geopolitical risk aversion. The rumors of TGA repurchase funds tonight merely reinforced the overall trend, not the triggering factor. Historical experience shows that after this technical signal appears, there is often momentum in the near term, but the 30-60 day window may see repeated fluctuations. The key for gold remains not in the moving average itself, but in the actual long-term trend. Interest rate expectations and changes in the dollar's credit rating. If Treasury intervention is seen as "disguised easing," gold will benefit.

Bessant and Warsh: The Most Worrying Combination for US Treasuries

Bessant's previous bet on declining interest rates failed, and his recent actions, such as selling short-term bonds and buying long-term bonds, and currency swaps, are seen by the market as "tricks." Major overseas institutions point out that this is similar to a mini version of quantitative easing, but on a much smaller scale, and the Treasury cannot print money. More troubling is that Fed Chairman Warsh faces a situation where inflation has been above target for years, and some officials favor raising interest rates. If his remarks are hawkish, long-term yields may rise again, weakening the effectiveness of the Treasury's repurchase agreements. Traders are worried about interference between fiscal and monetary authorities, causing the risk premium for US Treasuries to rise instead.

Oil Reefs: Hormuz and Inflation Rebound

Oil prices fell due to the lack of details regarding sanctions, but the International Energy Agency stated that it will not discuss a second release of strategic reserves. Actual traffic through the Hormuz remains far below normal levels, and the attacks on oil tankers in the Red Sea also highlight supply fragility. If energy costs rise again, it will push up inflation, limit the Fed's easing space, and thus suppress US Treasuries prices and disrupt gold. Traders need to distinguish between two scenarios: if oil prices fall moderately, US Treasury bonds and gold can benefit simultaneously; if oil prices surge, inflation expectations may dominate, and gold's safe-haven attributes may be suppressed by real interest rates.

The US dollar is caught between intervention and expectations of interest rate hikes.

Bessant attempted to support the yen through currency swaps to prevent Japan from selling US Treasury bonds, but the effect was short-lived. The TGA repurchase news further weakened expectations of dollar credibility. On the other hand, if Warsh signals an interest rate hike, the dollar may receive support. The short-term direction of the dollar is unclear, but volatility is rising. If the dollar continues to weaken, it will further strengthen the logic of gold as an alternative asset.

Conclusion In the short term, rumors of US Treasury repurchase agreements and the TGA (Treasury General Agreement on Treasury Bonds) may continue to support bond and gold prices, but the Bessant press conference will be the first test: if the details fall short of expectations or the market interprets it as "unconventional intervention," sentiment may reverse. US Treasury volatility may remain high before Friday's Jackson Hole speech. Gold is showing resilience above its 200-day moving average, but the risk of a pullback due to rising oil prices pushing long-term yields higher should be noted. If fiscal intervention is seen as credible, gold and US Treasuries may experience a period of convergence; if the Fed is forced to turn hawkish, rising US Treasury yields will retest gold. Overall, the environment remains highly volatile, and sentiment management is paramount.

Overview of Important Overseas Economic Events This Week:

Monday (August 31): Japan's July seasonally adjusted retail sales (month-on-month); US August Chicago Purchasing Managers Index; G20 Finance Ministers and Central Bank Governors Meeting, until September 1

Tuesday (September 1): Eurozone August Manufacturing Purchasing Managers Index (Final); UK August Manufacturing Purchasing Managers Index (Final) Eurozone August Consumer Price Index (CPI) Preliminary (MoM); Eurozone July Unemployment Rate; US August ISM Manufacturing Purchasing Managers' Index; 2026 SCO Heads of State Council Meeting Held

Wednesday (September 2nd): Australia Q2 GDP (QoQ); Reserve Bank of New Zealand Interest Rate Decision and Monetary Policy Statement; US August ADP Employment Change (Thousands); US July Personal Consumption Expenditures (MoM); US July Durable Goods Orders Preliminary (MoM); US July Durable Goods Orders Revised (MoM); Bank of Canada Interest Rate Decision

Thursday (September 3rd): Eurozone July Producer Price Index (YoY); US July Trade Balance (USD Billion); US Initial Jobless Claims (Thousands); US August ISM Non-Manufacturing Purchasing Managers' Index; Federal Reserve Beige Book

Friday (September 4th): Eurozone July Retail Sales (MoM); US August Non-Farm Payrolls (Thousands) US August Unemployment Rate; Bank of England Governor Bailey Speaks

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