I. Core Event: Fed FOMC Policy Meeting Super Week

The Federal Reserve will hold its FOMC meeting on September 15–16 local time. At 02:00 Beijing time on September 17, the interest rate decision, Summary of Economic Projections and dot plot will be released, followed by a press conference with Chair Wash at 02:30.

• Latest CME FedWatch Tool: Market pricing shows the probability of a 25bp rate hike in September has risen to 87.3%. The market has largely priced in this rate hike in advance.
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• Data backdrop: US August CPI rose 3.4% year-on-year and +0.4% month-on-month. Core CPI increased +0.3% month-on-month, exceeding market expectations of 0.2%. The rebound in core inflation is the main trigger for higher rate-hike expectations. Fed Governor Waller previously stated he would support a rate hike if August CPI rebounded, and the latest inflation data broadly meets this condition.
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• Market focus: The key of this meeting is not whether to raise rates, but the dot plot and officials’ interest-rate outlook for the rest of the year
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  1. If the dot plot lifts the med
  2. ian year-end rate and signals an additional rate hike within the year: US dollar and US Treasury yields will rise, putting downward pressure on gold prices.
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  4. If the dot plot maintains prior projections and Chair Wash delivers dovish remarks suggesting a pause in tightening after this hike: The US dollar will weaken, and gold may stage a relief rally on the "sell the rumor, buy the fact" theme.
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• Divided views within the Fed: Some officials emphasize inflation persistence and advocate continued tightening. Others argue the labour market is cooling gradually, and the inflation uptick is only a temporary disturbance, so sustained rate hikes are unnecessary.
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II. US Dollar Foreign Exchange Market Performance

The US Dollar Index has recently traded in a range at elevated levels. After the August CPI release, the dollar surged temporarily before edging lower. The core market debate is whether rate hikes have been fully priced in.

• Trading logic: Hawkish expectations support the US dollar in the short run. In the longer term, however, America’s massive fiscal deficit and Treasury supply pressures cap the dollar’s upside potential.
• This week is a central bank super week: Besides the Fed, the Bank of Japan and Bank of England will announce rate decisions. Volatility in cross currency pairs will amplify swings in the US dollar and precious metals.

III. International Gold Prices and Fundamentals

Market Quotes (Beijing time, Sep 14 early session)

• London Spot Gold: Around $4338/oz, slightly weaker on the day. COMEX NY Gold Futures: Approximately $4380/oz, modestly lower.
• Domestic markets: Gold T+D near 940 yuan/g; the main Shanghai Gold Futures contract at 941.94 yuan/g.
• Recent price action: Pressured by rising real US Treasury yields, gold has corrected lower from highs and dipped to near $4300/oz at one point. That said, rapid pricing of September rate-hike expectations has partially relieved selling pressure, leading to short-term technical choppiness.

Bullish & Bearish Drivers for Gold

✅ Bearish factors (weighing on gold prices)

1. Sustained high Treasury yields: The 10-year US Treasury yield briefly hit 4.97%. Higher real yields raise the opportunity cost of holding non-interest-bearing gold.
2. Fed rate-hike expectations: US dollar assets become more attractive, drawing capital away from precious metals and into Treasuries.
3. Inflation risks from rebounding crude oil prices: Fears emerge that the Fed will keep interest rates higher for longer.

✅ Bullish factors (underpinning prices)

1. Sustained central bank gold purchases as long-term support: World Gold Council data shows global gold ETF net inflows reached $18 billion in August, marking the second-largest monthly inflow on record. Long-term capital allocates to gold to hedge US dollar credit risks.
2. Geopolitical safe-haven demand: The Middle East situation remains volatile, and Oman has postponed regional talks. Geopolitical uncertainty can trigger safe-haven buying at any time.
3. Trading perspective: Most rate-hike expectations are already priced in. If the Fed statement turns out less hawkish than expected, a relief rally on exhausted bearish momentum is likely.

IV. Summary of Major Institutional Views

1. CITIC Construction Investment: A September rate hike is nearly certain. Near-term hike expectations are mostly priced in. Unless the Fed sends signals of further rate increases, gold is expected to bottom out and rebound once negative news is fully digested. Should the Fed surprise markets by skipping a hike, gold’s upside rally will be even larger. A breakdown of inflation components shows the rebound in core CPI is a temporary shock with little staying power.
2. Precious Metals Research: Gold’s pricing mechanism is undergoing a shift. Short-term moves are driven by Fed real yields, while long-term trends hinge on US fiscal debt and reserve diversification among global central banks. As a result, gold’s downside during this rise in rate-hike expectations has been limited compared with previous cycles, showing underlying resilience.

V. Key Events to Watch This Week (All times Beijing time)

1. Sep 15: US Retail Sales, Initial Jobless Claims, Bank of Japan Rate Decision
2. Sep 17, 02:00: Fed Rate Decision + Dot Plot; 02:30 Fed Chair Press Conference
3. Sep 18: Bank of England Rate Decision