Gold Prices Plunge After Rapid Surge
Date:2026-09-02View:3Tags:SSAW steel pipe,Galvanized pipe,Drill pipe
Since the beginning of September, the gold market has experienced a rollercoaster ride of rapid rises and falls, with prices surging to a near three-month high before plummeting.
📈 Driving Forces of the Rise: Fiscal Concerns Trigger "Devaluation Trade"
The core driver of this gold price surge was deep market concern about the US fiscal situation. The massive US fiscal deficit and intervention in the long-term Treasury market fueled investor fears that the dollar's purchasing power would be diluted. This expectation of "dual easing" in fiscal and monetary policy fueled the so-called "devaluation trade." Coupled with geopolitical risks and continued gold purchases by global central banks, this pushed international spot gold prices to a more than three-month high above $4,696 per ounce at the end of August. For reference, gold prices rose by approximately 10% overall in August.
📉 Driving Forces of the Plunge: Hawkish Rhetoric and Energy Shock
However, this optimism was quickly shattered by a hawkish signal. Last Friday (August 28), Federal Reserve Chairman Warsh spoke at the Jackson Hole Economic Symposium, emphasizing that the 2% inflation target was "unwavering" and hinting that the Fed "still has work to do" if inflation doesn't fall quickly enough. These remarks quickly reversed market expectations:
Interest rate hike expectations surged: Market bets on a September rate hike by the Fed jumped from about 35% to over 60%, with institutions like Barclays even predicting two more rate hikes this year.
The dollar and yields rose simultaneously: Rate hike expectations directly pushed up the dollar and drove up yields on major global government bonds. The yield on the 10-year US Treasury bond broke through 4.75%, reaching a new high since January 2025.
Oil prices added fuel to the fire: The renewed escalation of the US-Iran conflict pushed Brent crude oil prices above $94 per barrel, further strengthening inflation and rate hike expectations.
The chain of "hawkish comments + rising oil prices → rising inflation expectations → increased probability of rate hikes → rising real yields" temporarily overshadowed gold's safe-haven appeal. For gold, which does not generate interest, rising interest rates and bond yields mean higher holding costs, triggering a technical sell-off. Spot gold prices consequently fell for several consecutive days, briefly dipping below $4,300 per ounce in early September.
