The US August core PCE and September nonfarm payrolls data will directly shape market expectations for Federal Reserve rate hikes, becoming the central variable for pricing global major asset classes. Overseas markets are poised to enter a "super data week." During the National Day long holiday, the US will release its August personal core consumption expenditure price index (PCE), September nonfarm payrolls report, ISM manufacturing index, and the final annualized second-quarter GDP reading; the eurozone consumer price index (CPI) and purchasing managers' index (PMI) will also be published in parallel, opening a critical verification window for global inflation trends and central bank rate paths.
Among these, the US August core PCE and September nonfarm payrolls data will directly influence market expectations for Fed rate hikes, becoming the core variables for global major asset pricing. In the past week, the 30-year US Treasury yield has broken above 5.5%; the dollar index has climbed past the 101 mark, hitting an eight-week high; and spot gold has been locked in a tug-of-war around $4,300. Xavier Baraton, global chief investment officer at HSBC Investment Management, told Yicai that the driving logic behind US Treasury yields is shifting from "the Fed's next move" toward deeper fundamental factors such as fiscal credit and debt supply, and this shift is forcing investors to re-examine the traditional pricing relationship among Treasuries, the dollar, and gold.
Yicai reporters, synthesizing institutional views, found that short-term market volatility will still be dominated by data and geopolitical sentiment, but what determines the medium- to long-term trajectory of gold, the dollar, and Treasuries are three deep-seated logics: sovereign credit restructuring, fiscal sustainability, and changes in the global monetary system.
Under the Treasury storm, why has gold shown resilience?
The US Treasury market experienced violent selling over the past week. The 10-year yield rose from 4.94% on September 21 to 5.15% on September 25, while the 30-year yield rose from 5.28% to 5.49% over the same period, touching an intraday high of 5.53%. Alain Bokobza, head of global asset allocation at Societe Generale, warned that a 10-year Treasury yield of 5.5% could be the tipping point where rising borrowing costs begin to overwhelm earnings growth, and a break above that level would put substantial pressure on global equity markets.
Notably, despite the suppression from high yields, gold did not weaken in tandem and consistently held the lower range it has occupied since July. As of the September 26 close, London spot gold was quoted at $4,284 per ounce, edging higher and demonstrating extremely strong downside resistance. Ole Hansen, head of commodity strategy at Saxo Bank, said the traditional negative correlation between gold and Treasury yields is failing. Even as the 10-year Treasury yield broke above 5% to a two-decade high, gold ETF holdings still climbed to a seven-month high. Mounting concerns over the US fiscal deficit and debt scale are pushing gold prices to gradually decouple from Treasury yields.
This decoupling is essentially a deep migration of gold's pricing anchor. Donghai Securities believes gold pricing has entered a shifting phase of "short-term focus on rates, medium-term focus on central bank gold purchases." The constraints of the traditional "dollar-Treasury" credit system are strengthening, overseas funds' willingness to allocate to Treasuries is weakening, and yields are being passively pushed higher. At the same time, global central bank gold buying has rebounded sharply: in the first quarter of 2025, global central bank gold purchases totaled 56.5 tons, and in the second quarter they surged to 288.9 tons, a quarter-on-quarter increase of 411.1% and a year-on-year increase of 62.4%. Combined with returning ETF and futures flows, strategic allocation demand for gold continues to recover.
Jiang Xianwei, senior global market strategist at JPMorgan Asset Management China, said the Fed's hawkish policy is pushing up real rates and strengthening the dollar, which will still weigh on non-yielding gold in the short term; but the core logic supporting gold prices over the medium and long term has not wavered. Global central banks' continued gold accumulation is essentially a long-term arrangement to hedge against US fiscal risks and advance de-dollarization. "Before year-end, gold will still be suppressed by the high-rate environment, and short-term upside will be limited, so investors need to lower their short-term return expectations," Jiang said. Over a longer horizon, the Fed is expected to begin a rate-cutting cycle in the second half of 2027 to 2028, when falling real rates, a weaker dollar, and continued central bank gold buying will resonate as multiple positive factors, making it highly likely that gold prices will restart an uptrend and challenge previous record highs again.
Will the dollar remain strong?
On the currency side, the dollar's short-term strength is prominent. The dollar index rose in seven of the past 10 trading days, once touching 101.3 to hit an eight-week high. "Short-term support does indeed exist." A CICC research report argued that before core inflation, consumption, and employment weaken in sync, the dollar will still be supported by policy rate differentials and an uncertainty premium, but the basis for further upside is not solid. In addition, Middle East tensions combined with elevated Treasury yields have also provided the dollar with extra safe-haven and rate-differential support.
Shenwan Hongyuan further pointed out that a trend-like strengthening of the dollar depends on continued Fed rate hikes. The September hike has already landed, and if subsequent moves are only isolated hikes that cannot form a trend of tightening, the dollar will struggle to launch a one-way appreciation. On the geopolitical front, the dollar has a short-term positive linkage with oil prices; if the US-Iran conflict escalates, the dollar may extend its relatively strong trend; if the situation eases, the dollar index will likely fall back into its core fluctuation range of 97 to 103.
Xia Yingying, head of the precious metals and new energy research group at Nanhua Futures, believes this round of Fed tightening is not driven purely by high inflation, but is more a preventive operation to restore policy credibility and stabilize US Treasury credit, and does not mean a new rate-hike cycle has restarted. Current market rate-hike expectations are overly crowded, having priced in a cumulative 4.2 hikes through mid-next year, and hawkish pricing is clearly overextended. She also cautioned that crude oil is a core variable affecting major asset class trends in the fourth quarter, and the risk of negative feedback across stock, bond, and currency markets also needs vigilance. If gold prices pull back due to rising October rate-hike expectations, that would instead present a better medium- to long-term allocation window.
Baraton said this year's rise in Treasury yields has been mainly driven by higher real yields, with term premiums rising in tandem. Since late June, long-term US inflation expectations have recovered modestly but remain below early 2025 levels, indicating that fiscal sustainability risks, excess debt supply, and geopolitical risk premiums are jointly pushing long bond yields higher, and the yield curve faces persistent steepening pressure. In the short term, long-end Treasury yields may remain in high-level oscillation. High discount rates will continue to suppress high-valuation, long-duration equity assets; although the dollar is supported by short-end rates, the complex long-end rate environment will make the linkage between gold and the dollar no longer a simple linear negative correlation.
"Super Data Week" arrives
During the long holiday, a series of heavyweight US economic data releases will determine the short-term rhythm of asset pricing. The US will release August PCE on September 30 local time. Market expectations suggest headline PCE may hold at 3.7% year-on-year, while core PCE is expected to remain at 3.3% year-on-year, both clearly above the Fed's long-term 2% inflation target. On October 2 local time, the US Labor Department will release the September nonfarm payrolls report, and a Reuters economist survey expects new jobs to slow from 162,000 in August to 100,000, with the unemployment rate forecast at 4.2%. The CME Group Inc "FedWatch" tool shows that as of the September 25 close, the market priced a 64.2% probability of a Fed hike by the end of October and a 51% probability of "one more hike" in December.
Market participants said inflation remains highly sticky at elevated levels, and stronger-than-expected employment data could reinforce hawkish Fed expectations, conversely pressuring risk assets and disrupting precious metals trends. Gold's short-term direction depends not simply on the strength or weakness of the data, but on how the data plays out through the transmission chain of "inflation-rate hikes-real rates." Geopolitical risk is also an important variable. Recently, concerns over Middle East conflict have cooled, with Brent crude closing at $97.62 per barrel, down 2.59%. If geopolitical tensions continue to ease, falling oil prices will relieve inflation pressure; if the conflict repeatedly escalates, oil and gold prices may strengthen in tandem, reshaping market pricing logic.
Compared with short-term data disturbances, institutions place more emphasis on the fundamental shift in gold's medium- to long-term pricing logic. Ryan McKay, senior commodity strategist at TD Securities, noted that although gold continues to face headwinds from rising rates, underlying investment demand remains strong, and "gold prices are about to enter their next leg higher. As investor and central bank demand for gold grows again, gold prices are expected to break above $5,000 per ounce in 2027." Goldman Sachs maintained its forecast for gold to reach $5,400 per ounce by the end of 2027. The institution believes monetary tightening will only slow the pace of gold's rise, not reverse the overall uptrend, with supporting factors including continued central bank gold buying and Middle East geopolitical risks. UBS expects gold to reach $4,600 per ounce by the end of 2026 and rise to $5,400 per ounce by September 2027. UBS strategist Stanoeva said the pressure from rate hikes is only a short-term disturbance, and structural positives such as high global debt, expectations of a weaker dollar, geopolitical risks, and central bank gold purchases have not changed.
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