In August, following disappointing non-farm payroll data, the U.S. CPI remained relatively mild, leading the market to refocus on expectations for a rate cut in September. At the Jackson Hole central bank conference, Powell indicated that adjustments to monetary policy may be necessary due to shifting risk balances. The market interpreted this as a dovish signal, anticipating that the Federal Reserve would resume rate cuts in its September meeting. Later in the month, Trump unexpectedly announced the dismissal of Fed board member Cook, raising concerns about the Fed’s independence. These combined factors weakened the dollar, allowing gold to surge past $3,400. Gold producers showed strong performance, as the market recognized their robust free cash flow and sustainable profits, leading to rising valuations.
Domestically, industrial profits fell by 1.5% year-on-year in July, while new social financing and RMB loans fell short of expectations. Despite this, the stock market thrived, particularly in hard tech and commodities, fuelling bullish sentiment. In September, weak U.S. economic data, including six consecutive months of declining manufacturing PMI, solidified expectations for a rate cut, with gold nearing $3,600. However, caution is warranted as the market transitions from rate-cut trades to recession fears.