I. Market Snapshot

1. Spot Gold (XAUUSD): It plunged sharply during Wednesday’s US session, hitting a low of $4286/oz with a single-day decline of 1.71%. In Thursday’s Asian session, gold staged a mild corrective rebound and traded sideways in the $4290–4320 range. Key near-term support sits at $4280–4300, while resistance is at $4340. COMEX gold futures briefly broke below the $4300 threshold, weighed down by rising US Dollar and US Treasury yields.
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3. US Dollar Index (DXY): Rose for four consecutive days, peaking at 101.23, the highest level in nearly two months, and closed at 101.06. The dollar strengthened as markets priced in higher odds of another rate hike in October, fueled by better-than-expected US PMI and hawkish remarks from Fed officials.
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5. US Treasury Yields: The 10-year Treasury yield climbed above 5.05%, and the 2-year yield advanced in tandem. Higher holding costs for non-interest-bearing gold assets are the core macro driver behind this sharp gold pullback.
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7. Spot Silver (XAGUSD): Exhibited even greater volatility, closing Wednesday at $64.43 with a steep 3.95% daily drop. The entire precious metals complex came under synchronized pressure.
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II. Key News & Market Drivers

1. US PMI Surpasses Forecasts, Rate Hike Expectations Strengthen

S&P preliminary September PMI data was released: Manufacturing PMI at 57, Services PMI at 58.7, far exceeding market consensus. New orders and capacity pressure sub-indexes improved concurrently, signaling solid domestic demand in the US and sticky inflation.
 

After the data release, markets reassessed the Fed policy outlook. Investors see room for an additional 25bp rate hike within the year. Fed Governor Barr delivered hawkish comments, stating inflation risks have risen and the Fed may implement further rate hikes to return inflation to target. His remarks pushed US Treasury yields and the US Dollar Index higher.
 

2. UN General Assembly: Indirect US-Iran Talks. Geopolitical Risks Underpin Crude Oil, Pressuring Gold Short-Term

On the sidelines of the UN General Assembly in New York, the US and Iran held indirect negotiations mediated by Qatar. Iran laid out preconditions for reopening the Strait of Hormuz: a permanent halt to US military operations against Iran and its allies, full sanctions removal, return of frozen assets plus compensation for damages. Iran stated the strait will remain closed until conditions are met, sending no signals of de-escalation.
 

The Strait of Hormuz is a global crude oil shipping chokepoint. The news triggered a rebound in crude prices, reviving market concerns over energy inflation risks. Higher oil prices reinforce the narrative of “sticky inflation → Fed keeping high rates”, which is negative for gold in the short run. However, the geopolitical conflict itself offers medium-to-long-term support for gold’s safe-haven demand, creating a tug-of-war between bulls and bears.
 

3. Institutional Views: Near-Term Headwinds, Central Bank Gold Purchases Support Prices Over the Medium to Long Term

• Goldman Sachs: Maintains a bullish stance. It argues global central bank gold buying is underestimated, and revised its end-2026 gold price target upward to $4900/oz. The bank highlights sustained buying from multiple central banks including China as the fundamental pillar underpinning gold prices in the medium and long term.
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• BMO Capital Markets: While the US dollar and interest rates cap gold prices in the short term, physical gold demand is recovering. Wedding-season physical buying in India remains resilient. ETF inflows and futures long positions stay healthy. US fiscal deficits and US dollar credit risks will boost demand for gold as a hedging asset over the long term.
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• CICC: Gold is currently in a phase of confrontation between short-term bearish rate factors VS long-term bullish factors from currency and debt risks. In the near term, focus on US inflation prints and long-dated US Treasury yields. Over the medium to long term, keep an eye on persistent central bank gold purchases and de-dollarization trends worldwide.
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III. Forex Market Highlights

1. EURUSD: Pressured by the stronger US dollar. Eurozone economic indicators remain weak. The rate differential between ECB rate-cut expectations and hawkish Fed outlook leaves the euro lacking rebound momentum in the short run.
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3. GBPUSD: Also facing downward pressure. UK inflation eases slowly while economic growth stagnates, keeping sterling weak.
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5. USDJPY: Rose alongside climbing US Treasury yields. The widening US-Japan rate differential leaves the yen with limited catalysts for a strong rebound. Markets continue monitoring policy statements from the Bank of Japan.
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IV. Key Events to Watch (Next 2 Trading Days)

1. US Initial Jobless Claims, leading indicators related to PCE inflation
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3. Whether long-dated US Treasury yields can hold above 5%
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5. Subsequent diplomatic remarks from US and Iran, updates on the Strait of Hormuz
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7. Speeches by other Fed officials for further clues on policy stance