As the domestic market closing bell rang and trading wrapped up for the afternoon session, the flow of market intelligence never pauses. Let's dive into the latest financial updates and grasp the core dynamics shaping today's trading landscape.
Gold and silver prices are surging. As of the latest check, London gold is up 0.88% to $4,558.82 per ounce, while London silver has climbed 1.29% to $68.95 per ounce. On the domestic futures front, Shanghai gold has advanced 1.84%, and Shanghai silver has jumped a hefty 4.1%. On the news front, U.S. stocks closed lower overnight, putting broad pressure on risk assets while safe-haven plays strengthened against the trend. Additionally, one of the core pillars supporting gold prices is the expectation of declining long-end U.S. Treasury real yields. Market players note that the U.S. Treasury's expanded bond buyback program is compressing long-end yields, effectively creating a looser financial environment. If inflation flares up again, the Federal Reserve could be forced to hike rates as a countermeasure. However, with recent retail and employment data showing softness and inflation staying broadly manageable, most analysts expect the Fed to remain on hold in September. Still, the bar for a rate hike has clearly lowered, and markets cannot rule out a move before year-end.
It's been observed that as a string of U.S. economic indicators weakens, bond traders are rapidly revising their outlook on the Fed's policy path. Although long-term Treasury yields remain at multi-year highs, fund flows in the rates options market are pivoting toward bets that the Fed will cut rates by 2027, hedging against the risk of an economic slowdown. Some research institutions suggest gold is benefiting from easing pressure on the dollar and rising rates, along with geopolitical risk premiums. The U.S.-Iran conflict could undermine dollar credibility, reinforcing central banks' diversification needs, and both monetary policy and geopolitical dynamics are set to underpin gold's trajectory over the medium to long term.
Notably, while the Fed held rates steady in July, the latest meeting minutes flashed a distinctly hawkish signal: three officials dissented against the decision to maintain rates, advocating for a 25-basis-point hike, and some officials stated that if inflation doesn't retreat toward the 2% target, raising borrowing costs would be necessary. Rate hikes are gaining broader support. Sticky inflation, combined with energy price risks from geopolitical conflicts and the AI investment boom driving up aggregate demand, makes the path back to lower inflation more uncertain. In the near term, AI acts as a source of inflationary pressure, but over the long run, it could suppress inflation by boosting productivity.
Adding to the mix, former President Donald Trump has publicly voiced strong dissatisfaction with the Fed's monetary policy. His core demand is clear: even if current U.S. economic data looks solid, the Fed should persist with accommodative policy and accelerate rate cuts to align with economic needs and alleviate debt pressures.
Shifting to Japan, core inflation has now risen year-on-year for 59 consecutive months. Inflationary pressures in Japan clearly intensified in summer 2026. July's overall inflation rate hit its highest level this year, with energy and fresh food prices accelerating in tandem, drawing more market attention to the Bank of Japan's policy trajectory. Data from the Ministry of Internal Affairs and Communications, released on the 21st, shows that excluding fresh food, Japan's July core consumer price index stood at 102.1, up 1.8% year-on-year, widening from June's 1.6% gain. This marks the 59th straight month of year-on-year increases in the core CPI. Energy prices swung from a 0.4% decline in June to a 0.6% rise in July, a key driver behind the expanded core inflation. Additionally, food prices excluding fresh food climbed 3.0% year-on-year in July, also fueling the uptick. Analysts believe that while Japan's core CPI has stayed below the BOJ's 2% target for seven consecutive months, upward price pressures have not clearly faded. A weaker yen and Middle East tensions could further lift Japan's import and energy costs, pushing inflation higher. The ministry also adjusted the CPI base year from 2020 to 2025 this month, with indices from January 2025 onward recalculated under the new base. Under the new framework, June's overall CPI year-on-year change is roughly in line with the old base, showing no major statistical shifts.
Turning to the U.S. Treasury market, Bessent's "market rescue" appears to have had only a one-day effect. Global traders have been fixated on Treasury Secretary Bessent as an invisible support line for the bond market takes center stage—the Treasury announced it would double the single-tranche buyback size for long-term U.S. bonds of 10 years or more, from $2 billion to $4 billion. Bessent then hinted "there could be more." Observers note that Bessent's two rescue attempts have faltered: the first $4 billion buyback quieted the market for a day (with Treasury yields bouncing), while the second hint of more only settled things for a few minutes. Some market participants argue Bessent's measures are unlikely to spark a more durable rebound. "This could act as a circuit breaker for the global long-dated bond selloff," said Andrew Lilley, chief rates strategist at Barrenjoey Markets Pty in Sydney, adding that the move alone is insufficient to stop yields from rising. Andrew Canobi, head of fixed income at Franklin Templeton, noted: "There's a set of forces working in sync, all pointing toward higher bond yields and a steeper yield curve. Major developed economies are facing fiscal strain and sticky inflation. As long as these factors remain in play, I don't see much buying appetite for long-dated bonds."
Goldman Sachs, meanwhile, sees Treasury yields heading higher—despite the recent selloff in long-dated U.S. debt, valuations don't look significantly out of line with macro fundamentals or comparable assets. Strategist Friedrich Schaper wrote in a note that the Treasury's expanded buyback announcement signals a willingness to use unconventional tools to support long bonds. "But, as we've noted with Japan's JGB trajectory and recent yen interventions, unless underlying macro drivers are addressed, these actions may only have a very short-lived impact after the announcement." Goldman added that despite some encouraging fundamental news, the market still sees upside risks to yields as greater than downside risks.
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