International precious metals markets staged a powerful rally on September 3, with gold futures briefly approaching the historic $4,500 per ounce threshold and spot silver reclaiming the $66 level. The surge unfolded against a backdrop of softening US labor data, dovish signals from Federal Reserve officials, and phased easing of Middle East tensions—prompting a marked cooling in market expectations for another Fed rate hike in September and a rapid rotation of capital back into the previously pressured precious metals sector.
As of Thursday's trading session, spot gold pulled back to around $4,448 after testing the $4,500 zone, still posting an intraday gain exceeding 1%; COMEX silver futures rose approximately 1.55%, touching $66.70 at one point during the session. A chart circulating on social media claimed that the combined market value of gold and silver increased by roughly $1.8 trillion over the past 30 hours. However, this figure depends on valuation assumptions for global above-ground gold and silver stockpiles, and is better viewed as a rough estimate rather than a rigorous market capitalization calculation.
The core driver behind this rally stems from a shift in monetary policy expectations. Just days earlier, the precious metals market was still under the shadow of a potential additional Fed rate hike. Fed Chair Kevin Warsh's hawkish remarks at the Jackson Hole symposium, compounded by inflation concerns arising from rising energy prices, had prompted investors to brace for a tighter monetary environment.
But the macro picture shifted within a matter of days. New York Fed President John Williams publicly stated that evidence suggests inflation pressures continue to ease as tariff effects fade; he specifically noted that recent energy price increases have not broadly transmitted to services inflation. Meanwhile, the latest ADP employment data showed the US private sector added only 38,000 jobs in August—the lowest monthly increase this year—providing traders with fresh ammunition to question whether the economy needs further tightening.
As a result, market-implied odds of a September Fed rate hike pulled back notably from recent highs. While real-time probability readings vary depending on the observation window—social media cited 50.4%, while some reports earlier in the day still showed probabilities above 60%—the direction is clear: traders' conviction in another hike is wavering.
This shift in expectations transmitted directly to two markets critical for precious metals: Treasury yields and the US dollar. The US Dollar Index fell approximately 0.4% on Thursday to 99.21, with Treasury yields declining in tandem. For dollar-denominated gold, a weaker dollar means lower purchasing costs for holders of other currencies; falling bond yields reduce the opportunity cost of holding zero-yield assets. These two factors together created a tailwind environment for gold's advance.
Silver's rebound was equally impressive. Compared with gold, silver possesses both monetary and industrial attributes, often exhibiting greater elasticity when precious metals sentiment improves. When yields rise and tightening expectations intensify, silver's declines can be steeper; when expectations reverse, its rebound tends to be more rapid.
The evolution of Middle East geopolitics added another layer of complexity to the rally. Recent escalation in US-Iran tensions had pushed energy prices higher, creating a peculiar dilemma for precious metals markets: geopolitical conflict typically stimulates safe-haven demand for gold, but surging oil prices fuel inflation, which in turn raises the probability of Fed tightening and suppresses gold prices.
However, US President Trump's remarks suggesting that military action against Iran could be relatively brief eased market concerns about persistently elevated energy prices to some extent. Brent crude traded around $95 per barrel on Thursday, with prices edging lower during parts of the session. This gave precious metals a rare combination of support: geopolitical uncertainty persists, but fears of a sustained oil-driven inflation shock have moderated.
China's Domestic Futures Market: Bulls vs. Bears
China's domestic futures market is likewise navigating complex, interwoven trading dynamics. Research reports from multiple Chinese futures firms indicate that the impact of Middle East geopolitical conflict on energy and chemical products is unfolding across different dimensions.
Take ethylene glycol as an example: disruptions to Strait of Hormuz shipping have led to a significant decline in expected import arrivals, with inventories at major ports in eastern China continuing to draw down to historic low ranges. Extreme low inventory levels have endowed the contract with high price elasticity, and tight spot circulation has driven basis strength. But risks remain: the sequential restart of previously idled domestic Chinese production facilities is pushing output marginally higher, polyester operating rates are declining amid weak downstream production and sales, and severe downstream losses have dampened willingness to chase high-priced feedstock.
Methanol's trading logic shows similar characteristics. Middle East geopolitical standoff has sharply lowered September import arrival expectations, coastal port inventories are low with tight circulating spot supply, and firm coal feedstock prices have solidified bottom-level cost support. However, widening losses at downstream MTO (methanol-to-olefins) facilities are pressuring operating rates, with expectations of shutdowns at large external-purchase MTO plants such as Fund Energy's facility capping upside.
In crude oil, Iran's military strikes on US bases have escalated the Middle East standoff, Strait of Hormuz passage disruptions have kept Middle East outbound flows at low levels, the Russia-Ukraine conflict has led Russia to lower future crude production and export expectations, and global and US commercial crude inventories remain at relatively low levels overall. But if the US pushes for a mid-term ceasefire or releases de-escalation signals, combined with weak gasoline consumption amid high oil prices and profit-taking pressure from longs under extreme month-spread structures, these could all serve as triggers for a market reversal.
Ferrous Metals: Cost Support vs. Demand Concerns
Ferrous metals are exhibiting a tug-of-war between cost-side support and demand-side weakness.
In ferrosilicon's trading logic, a sharp month-over-month rise in semi-coke feedstock prices has pushed production costs higher, coking coal price increases in major producing regions and elevated industrial electricity tariffs have reinforced cost support, large steel mills' September procurement pricing increases have boosted market confidence, and scarce low-priced spot supply has strengthened producers' resolve to hold prices firm. However, rising operating rates are driving continued output increases, sample enterprise inventories have accumulated month-over-month to the highest levels for the same period in recent years, downstream sample steel mills' weekly ferrosilicon demand has declined for consecutive weeks, and end-user steel's seasonal transition has underperformed expectations, constraining alloy procurement.
Coking coal's supply-side narrative is more pronounced. Stringent safety supervision in Shanxi's major producing areas has left mine resumption significantly below expectations, with widespread instances of resumption without full output recovery, keeping capacity utilization suppressed at low levels; fuel shortages and customs clearance restrictions have contracted Mongolian coal supply through the Ganqimaodu border crossing; the fourth round of coke price hikes has improved downstream coking enterprises' procurement rhythm; and declining total inventories across all categories have driven spot price increases. But if border crossing truck volumes gradually recover, import supplementation will increase; downstream steel mill blast furnace margins are being squeezed by coke price hikes, deepening losses; and if steelmakers schedule a new round of maintenance, it will feed back into weaker raw material demand.
In lithium carbonate, week-over-week production growth is keeping supply-side pressure persistent, September production schedules and ample expectations for Chilean import arrivals are adding to supply pressure, and continuous inflows of deliverable warehouse receipts on the futures market are capping upside rebound space. However, traditional peak-season September-October inventory restocking demand still holds expectations for phased release, month-over-month increases in lithium iron phosphate production scheduling are driving restocking of essential demand, robust energy storage orders are providing localized consumption support, and cost support from spodumene and integrated lithium extraction is limiting deep declines on the contract.
The red date (jujube) market faces a relatively loose supply-demand balance. Jujube trees in producing areas are growing steadily with overall good first-fruit set, the new-season crop is in the coloring and sugar-accumulation stage with no material yield-reduction disasters yet, and increased arrivals at wholesale markets are keeping spot supply ample. But quality risks such as fruit cracking if excessive rainfall occurs during the ripening period, and potential demand improvement from Mid-Autumn Festival and National Day holiday restocking, remain variables worth monitoring.
The Critical Test Ahead
For gold and silver, the next major test is imminent. Friday's US Nonfarm Payrolls Report could materially alter market expectations for the Fed's September meeting. A weak jobs report would further erode rate-hike expectations, providing additional support for precious metals; an unexpectedly strong report could produce the opposite effect. The market is already positioning ahead of this data, which partly explains the heightened volatility in both metals recently.
In China's domestic commodity markets, the latest developments in Strait of Hormuz shipping and the US-Iran standoff, the timing of inventory inflection points across various commodities, and the strength of downstream demand realization will collectively determine the sustainability of rallies in ferrous and energy-chemical products. In the tug-of-war between cost support and demand weakness, marginal changes on either side could trigger rapid market regime shifts.
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