[Bearish for Precious Metals]
Minutes of the US Fed’s July meeting released hawkish signals; rate-hike options remain in the policy toolkit
The minutes of the US Fed’s July monetary policy meeting, released in the early hours of August 20 Beijing time, showed that although the Fed ultimately kept rates unchanged by a 9–3 vote, internal hawkish forces were stronger than market expectations. Several participants believed that if inflation failed to continue to pull back, further monetary tightening would be a necessary option; some policymakers even noted that the current degree of financial tightening might still be not enough to bring inflation back to the 2% target. The minutes also disclosed that, in addition to the three regional Fed presidents who voted against the decision, two non-voting officials also voiced support for rate hikes, indicating a broader hawkish camp in practice.
In addition, the meeting specifically discussed the risk that AI-industry investment could lift aggregate demand and intensify inflationary pressures, as well as the tail risk that Middle East conflicts could trigger a rebound in energy prices and prolong the period of high inflation. Fed Chairman Walsh proposed at the meeting cutting the number of annual FOMC meetings from eight to six, but made it clear that no adjustment would be implemented this year, leaving the near-term policy pace unaffected. Overall, the US Fed has not closed the door on rate hikes, the period of high rates has been further extended, and the valuation-suppression logic for non-yielding precious metals has not been fundamentally removed.
US Treasury yields hit multi-year highs; a global bond sell-off weighed on precious-metals valuations
This week, global bond markets faced a systemic sell-off, with long-end yields climbing sharply. The 10-year US Treasury yield briefly rose to 4.75% intraday, a 19-month high since January 2025; the 30-year US Treasury yield broke above 5.3%, reaching its highest level in nearly 19 years since June 2007. Meanwhile, sovereign yields in major economies including France, Germany, the UK, and Japan also moved higher in tandem: Germany’s 30-year Bund issuance yield hit a 15-year high, France’s 10-year yield broke above 4.1%, and the global risk-free rate center shifted upward overall.
Although news on Thursday that the US Treasury would expand the scale of its buybacks triggered a short-term pull back in long-bond yields, it did not change the overall pattern of yields fluctuating at highs. As non-yielding assets, precious metals have seen their opportunity costs continue to rise as real rates moved higher, weighing on their capital appeal. Coupled with supply-side pressures such as thin market liquidity in August and concentrated enterprise bond issuance, long-end US Treasury yields were more likely to rise than fall, creating sustained valuation pressure on precious metals.
The US-Iran Negotiation Window Officially Expired, Geopolitical Tensions Repeatedly Reinforced the Inflation-and-Rate-Hike Chain
This week, the US-Iran situation reached a critical period: the 60-day ceasefire memorandum of understanding signed in June officially expired on August 17. The two sides had severe differences on core issues and failed to reach any permanent peace agreement. US President Trump stated clearly on the 18th that the US would not hold any talks with Iran now or in the future, and had instructed the negotiating team to cease contact, shifting the strategy from “cripple quickly” to “strangle gradually”; Iran, meanwhile, reiterated that the Strait of Hormuz would remain closed until the US lifted the blockade and sanctions and unfroze assets.
Meanwhile, the UAE and Iran accused each other of launching military operations, and regional conflict faced the risk of spilling over and spreading. Renewed geopolitical tensions pushed international oil prices to stabilize and rebound. Brent crude oil rebounded after finding support near $80. Rising energy prices intensified concerns about second-round inflation, in turn reinforcing the underlying logic for the US Fed to keep interest rates high and even raise rates further, forming a negative transmission chain of “geopolitical conflict → higher oil prices → sticky inflation → prolonged high interest rates,” which indirectly weighed on precious metals.
[Positive for Precious Metals]
The Treasury Doubled the Scale of Long-Dated Bond Buybacks; US Treasury Yields Pulled Back, Driving the US Dollar Lower
On August 19, the US Treasury announced that it would at least double the size of its liquidity-support buyback operations for long-dated nominal Treasuries in the 10-20-year and 20-30-year tenors. The cap per operation was raised from at most $2 billion to at least $4 billion. The new rules would take effect on September 9 and run through the end of the quarterly refinancing window on November 4. This marked the Treasury’s second increase in support for the long-bond market within two weeks, and was interpreted by the market as a signal that it was proactively moving to curb an overly rapid rise in long-end yields.
After the announcement, the 30-year US Treasury yield plunged 8 basis points intraday to around 5.19%, giving the long-bond market a period of respite. The US dollar index fell as much as 0.85% during the session, posting the largest single-day drop in three weeks and touching its lowest level since mid-May. A weaker US dollar directly lifted the valuation of US dollar-denominated precious metals; together with a marginal pullback in real rates, this drove a rapid rebound in precious-metals futures. The intervention was also seen by the market as a signal that the US fiscal authorities had begun to acknowledge debt-sustainability pressures, a long-term positive for gold’s credit-hedge thesis.
Bessent Led a US–Japan Coordinated Intervention; Debt-Risk Concerns Underpinned Gold's Medium and Long-Term Thesis
In early August, US Treasury Secretary Bessent led the first US–Japan coordinated FX intervention in nearly 30 years to jointly buy the yen. The US deployed about $5–10 billion, while the combined amount with Japan exceeded 13 trillion yen. The core rationale was not simply to support the yen, but to prevent Japan from selling US Treasuries on a large scale to stabilize its exchange rate—defusing the outside China “US Treasury sell-off bomb” at the source. In essence, it was a passive response to the fragility of the US debt system.
From “coordinated yen buying to stabilize the exchange rate” to “doubling buybacks to support long-dated bonds,” Bessent intervened in both FX and bond markets in rapid succession within just one month, indirectly confirming that US fiscal debt pressures had reached a tipping point requiring proactive management. US federal government debt has now surpassed $40 trillion, debt-servicing costs continued to climb, and risks to fiscal sustainability kept accumulating. Markets broadly expected that in H2, as economic pressures emerged, the direction of the US Fed’s rate cycle would shift; expectations of a long-term weaker US dollar and debt monetization will continue to support the medium and long-term allocation value of precious metals.
Record Central-Bank Gold Buying; Physical Demand Reinforced Bottom Support for Prices
The World Gold Council’s latest data showed that in Q2 2026, global central banks’ net gold purchases reached 289 mt, surging 62% YoY and marking the highest record for the same period in history. The PBOC has increased its gold holdings for 21 consecutive months; in July alone it added about 20 mt, the largest monthly increase since October 2023, bringing the year-to-date cumulative increase to 60 mt. Poland’s central bank bought 51 mt in Q2, continuing to advance toward its 700 mt reserve target. South Korea’s central bank, meanwhile, announced in August—after a 13-year hiatus—that it would resume physical gold purchases, positioning asset diversification as a long-term strategic direction.
A survey showed that 89% of respondent central banks expected global gold reserves to continue increasing over the next 12 months, the highest level since the survey began. Central-bank gold buying showed a clear countercyclical pattern: during Q2, when gold prices saw a sharp pullback, official-sector purchases instead intensified, underscoring a long-term strategic allocation attribute rather than short-term speculation. Ongoing central-bank accumulation, together with the resilience of physical gold demand, imposed a tangible constraint on downside room for precious metals, becoming a key force underpinning the price floor.
[Macro Summary]
This week, macro factors were mixed between bullish and bearish, and signals remained unclear. Early in the week, U.S. Treasury yields repeatedly hit new highs, alongside rising hawkish expectations, putting precious metals under pressure and prompting a corrective move; mid-week, the Treasury Department expanded the scale of buybacks, driving long-end yields to pull back, and gold and silver rebounded rapidly. In the short term, U.S. Treasury yields remained elevated and the US Fed’s hawkish stance was unchanged, leaving precious metals still exposed to downside risk; however, the increasing visibility of debt risks and central bank gold purchases provided medium and long-term bottom support, limiting downside room. Watch the Jackson Hole central bank annual symposium and marginal changes in the U.S.–Iran situation.
