OPEC Output Rises in August as US Labor Market Shows Signs of Cooling

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Summary:

OPEC output climbs in august, Saudi Arabia adds more than half the gain; U.S. Job Openings hit near-one-year low...

[Quick Facts]

1. Fed Beige Book: Activity flat across most districts, prices rise broadly.

2. OPEC output climbs in august, Saudi Arabia adds more than half the gain.

3. Kashkari sees "Some Room" for rate cuts.

4. Job Openings hit near-one-year low, fueling labor-market cooling fears.

5. Bailey casts doubt on November rate-cut prospects.

[News Details]

Fed Beige Book: Activity flat across most districts, prices rise broadly

Economic activity was "little or no changed" in most U.S. regions over the past several weeks, according to the Fed's latest Beige Book released Wednesday." A majority of the twelve Districts reported flat to modest growth since the prior Beige Book," the survey said, noting that contacts in nearly every region described consumer spending as flat to lower as wage gains failed to keep pace with rising prices.

The report showed price pressures broadening across all Districts, with ten citing "modest or moderate" inflation while two flagged "robust increases in input costs." Nearly every District referenced tariff-related price hikes, with multiple contacts highlighting outsized impacts on input prices.

OPEC output climbs in august, Saudi Arabia adds more than half the gain

The latest survey results indicate that the Organization of the Petroleum Exporting Countries (OPEC) and its allies have been continuously resuming suspended production, which drove up OPEC's crude oil output last month. OPEC increased production by 400,000 b/d, basically in line with the plan, bringing the daily output to 28.55 million barrels. Saudi Arabia, the leader of the organization, contributed more than half of the output increase.

Saudi Arabia raised its daily crude oil production by 230,000 barrels in August, reaching 9.6 million barrels. Although this was the largest increase among OPEC's 12 member countries, it still fell short of the 9.756 million b/d allowed for the country under the organization's agreement.

Kashkari sees "Some Room" for rate cuts

Minneapolis Fed President Neel Kashkari said in a speech on Wednesday, "I predict there will be no recession, and there are good reasons to believe that the cooling trend we're seeing may continue and will be relatively mild. Given that the neutral federal funds rate is around 3%, this implies there is some room for interest rates to decline in the coming years."

Considering the evolution of the economy, the challenges facing policy are becoming increasingly significant. Inflation remains too high. However, at the same time, the labor market is showing some signs of cooling. As a result, the Fed is facing a tricky situation as it attempts to strike a balance between its dual mandates.

Job Openings hit near-one-year low, fueling labor-market cooling fears

Data released by the U.S. Bureau of Labor Statistics on Wednesday showed that job openings in the U.S. dropped from a downwardly-revised 7.36 million in June to 7.18 million in July. The market had expected 7.38 million. This was the lowest level in 10 months, further confirming the trend shown by other data: against the backdrop of intensifying policy uncertainties, the weak employment growth is not accidental, and businesses' demand for labor is gradually weakening.

The report indicated that job openings decreased by 181,000 in the healthcare and social assistance sector and by 110,000 in the retail industry. Meanwhile, the largest increases in job openings were seen in the wholesale trade, construction, and federal government sectors. The number of lay-offs rose slightly. At the same time, the number of Americans voluntarily quitting their jobs remained at 3.2 million, unchanged from June.

These data highlight the market's concerns about the weakening labor market, and such signs have already emerged in various business and industry surveys over the past few months. This is mainly due to the uncertainties created by the trade war launched by Trump, which has left corporate management in a wait-and-see mode when it comes to hiring.

This set of data confirms the fact that the current job market is almost at a standstill, and it is difficult for many people to find jobs.

Bailey casts doubt on November rate-cut prospects

In a speech on Wednesday, Andrew Bailey, the Governor of the Bank of England, stated that inflation risks have increased. However, he is more concerned about the labor-market conditions. The interest-rate path will continue to decline gradually over the coming period, but policymakers may not maintain the previous pace of rate cuts. There is now a significantly increased level of uncertainty regarding exactly when and how quickly further measures can be taken.

[Today's Focus]

UTC+8 14:30: Switzerland's CPI in August

UTC+8 17:30: ECB Executive Board Member Piero Cipollone Speaks

UTC+8 20:15: US ADP in August

UTC+8 22:00: US ISM Non-manufacturing PMI in August

UTC+8 23:30: New York Fed President John Williams Speaks

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Gerik

Economic

Bond Yields Push Tech Stocks Lower

On the first trading day of September, Wall Street experienced sharp declines, driven by a rise in U.S. 30-year Treasury yields, which neared the 5% mark. This increase put additional pressure on technology stocks, many of which have already been highly valued after a strong recovery from the lows of April. Despite a slight recovery in the S&P 500, almost 400 of its components were in the red, reflecting widespread market concerns.

Large-cap stocks, including key technology players, have seen their prices drop. Nvidia, for example, recorded its longest losing streak since March. However, Alphabet’s stock saw a boost after a U.S. federal court ruled that Google did not need to sell its Chrome browser.

Rising Bond Yields and Fiscal Concerns

The increase in bond yields has intensified concerns over government debt levels, both in the U.S. and abroad. In the UK, the long-term bond yields have surged to their highest levels since 1998, adding to the pressure on Prime Minister Keir Starmer’s administration to address budget deficits. With government debt continuing to rise globally, investors are increasingly worried about fiscal discipline and the long-term sustainability of current economic policies.

U.S. President Trump recently announced plans to seek an expedited Supreme Court ruling on his tariffs, which a lower court had previously ruled to be illegal. Trump believes that tariffs are necessary for maintaining a strong economy, but critics point out that the uncertainty surrounding trade policies is contributing to market volatility.

Market Valuation Concerns

While market fundamentals, such as strong earnings growth and economic resilience, continue to support the S&P 500’s performance, investors are increasingly concerned about the high valuations, especially as the index is trading at 22 times its expected 12-month earnings. This is a level that has only been surpassed during the dot-com bubble and the tech boom post-COVID-19 in 2020.

The month of September historically tends to be volatile for markets, and concerns over trade, tariffs, and economic data could weigh on investor sentiment. S&P 500 valuations remain elevated, and while some analysts believe the rally may continue, others warn that the market is ripe for a correction if economic data weakens or geopolitical tensions escalate.

Outlook for Economic Data

This week, investors are particularly focused on labor market data, with the U.S. non-farm payrolls report due on Friday. Job openings data, which showed a decline to a 10-month low in July, suggest that the labor market may be cooling, which could reinforce expectations of a rate cut by the Federal Reserve. Traders are now pricing in a nearly 97% chance of a rate cut at the Fed’s September meeting.

Despite the volatility, some investors remain optimistic about long-term growth, with analysts recommending a diversified portfolio. Experts at Invesco and UBS suggest that September's market dips could offer buying opportunities, particularly in sectors like AI, energy, and healthcare, as the economy continues to show resilience.

While Wall Street faces significant volatility at the start of September, fueled by rising bond yields, fiscal concerns, and uncertainties around trade policies, the market continues to navigate through these challenges with a focus on economic fundamentals. Investors remain cautious, and September's data, particularly from the labor market, will likely play a crucial role in shaping market sentiment for the remainder of the year.

Source: Yahoo Finance

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James Whitman

Political

Russia-Ukraine Conflict

European leaders are increasingly concerned that Russia will mount a new offensive on Ukraine as they sit down with president Volodymyr Zelenskiy to discuss security guarantees for his country.

At their security council meeting in Toulon last week, German and French officials discussed the Russian troops massing outside Pokrovsk, a Ukrainian-held stronghold in the eastern Donetsk region, according to people familiar with the matter who asked not to be named.

Zelenskiy said on Friday that Russia had relocated 100,000 soldiers to the frontline outside the city, which the Kremlin’s forces have tried to encircle and seize without success for more than a year.

Capturing Pokrovsk would open the way to a Russian assault on the much larger cities of Kramatorsk and Sloviansk as Moscow seeks control over the entire Donetsk region.

The gathering of the so-called coalition of the willing in the French capital will aim to finalize discussions on the European level about security guarantees for post-war Ukraine, people familiar with the plans said. The leaders will also speak to Donald Trump.

The Europeans will likely want to tease out specific commitments about the US contribution to those assurances and to push Washington to tighten sanctions against Russia as Putin shows no signs of wanting to meet with Zelenskiy any time soon, the people said.

The French want the gathering to convey a message that Europe has done its part to support Ukraine and it’s up to the US president to deliver on his threat to increase pressure on the Kremlin. President Emmanuel Macron said Wednesday, standing alongside Zelenskiy in Paris, that Europe is ready to provide security guarantees to Kyiv.

The prime ministers of The Netherlands and Poland are expected to attend the meeting in Paris alongside Zelenskiy, while the British, Italian and German leaders as well as US Special Envoy Steve Witkoff will join via video conference, the people said.

Despite Trump’s recent drive to broker an end to Russia’s full-scale invasion, including a meeting with Putin in Alaska last month, Moscow hasn’t shown willingness to commit to a ceasefire. While the US president has threatened sanctions to put pressure on Russia, he has so far stopped short of imposing them.

Meanwhile, Europeans have taken the lead in discussing potential security assurances to Ukraine. That could involve sending soldiers to Ukraine once hostilities end, a prospect which still divides many European allies and which Russia has said it cannot tolerate. Trump has ruled out deploying US troops but said his country may provide air and intelligence support.

“Ukraine is going to have to agree with whatever the security architecture is,” US Ambassador to NATO Matthew G Whitaker said in an interview in Bled, Slovenia, on Tuesday. However, Russia will also “have to be comfortable,” he added.

Once Europe concludes its talks on the guarantees, leaders can collectively engage “even more intensely” with the US, said NATO Secretary General Mark Rutte on Wednesday. Getting clarity on that issue would be “extremely important” before any meetings involving Putin and Zelenskiy, he said.

Still, a senior European diplomat said the momentum seen early last month on diplomatic efforts has tapered, with negotiations stalling as Russia prepares to further attack Ukrainian territory.

Russian’s grinding summer offensive campaign hasn’t yet led to significant territorial gains for the Kremlin. Moscow’s troops have advanced slowly, capturing 2,033 square kilometers (785 square miles) in May-August or 0.3% of Ukraine’s total area.

Russia also has stepped up air attacks amid Trump’s efforts to end the invasion. July became the deadliest month for civilians in Ukraine since May 2022 as 589 were killed and 1,152 wounded, according to the UN. The latest Russian attack on Kyiv on Aug. 28, killed at least 25 people, local authorities said.

In the absence of any sign that Russia plans to end its war any time soon, Zelenskiy and his foreign backers are working on bolstering the Ukrainian army — a drive which Chanellor Friedrich Merz described as “the most important security guarantee we can give.”

Any questions about foreign troops in Ukraine can’t be answered until after a ceasefire is reached, Merz said. He stressed that the task of strengthening Kyiv’s military must continue throughout any peace negotiations with Russia.

“Ukraine must be able to defend itself in the long term, and we want to help it do so, both now and in the future,” said the German chancellor.

Source: Bloomberg

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IC Markets

Commodity

Forex

Economic

What happened in the Asia session?

The Asia session on September 4, 2025, was characterized by mixed economic data that reinforced diverging global monetary policy expectations. Gold’s record-breaking rally dominated commodity markets, while oil prices declined on supply concerns. Currency markets reflected the policy divergence theme, with the yen strengthening on BoJ normalization expectations and the dollar weakening on Fed cut prospects. Asian equity markets struggled amid ongoing trade uncertainties and profit-taking, while US employment data provided mixed signals ahead of Friday’s crucial payrolls report. The session underscored the market’s focus on central bank policy divergence and geopolitical trade tensions as primary drivers of financial market volatility

What does it mean for the Europe & US sessions?

Today’s trading sessions will be dominated by U.S. labor market data, Fed communications, and oil market dynamics ahead of the OPEC+ weekend meeting. The Swiss CPI data will provide insight into European inflation trends, while central bank speeches may offer further clarity on monetary policy direction. With markets already nervous about September seasonality and deteriorating economic indicators, any significant deviation from expectations in today’s data releases could trigger substantial market volatility.

The Dollar Index (DXY)

The US Dollar faces a challenging environment on Thursday, September 4th, with multiple headwinds converging. Near-certain Fed rate cut expectations, cooling labor market data, and ongoing policy uncertainties are maintaining downward pressure on the currency. Today’s economic releases, particularly the ADP employment data and ISM Services PMI, will be crucial in determining whether the dollar can stabilize around current support levels or faces further declines toward the 96.70-97.00 support zone. The 90% probability of a September Fed rate cut suggests the dollar’s weakness may persist until more clarity emerges on the central bank’s easing path.

Central Bank Notes:

● The Board of Governors of the Federal Reserve System voted unanimously to maintain the Federal Funds Rate in a target range of 4.25% to 4.50% at its meeting on July 29–30, 2025, keeping policy unchanged for the fifth consecutive meeting.

● The Committee reiterated its objective of achieving maximum employment and inflation at the rate of 2% over the longer run. While uncertainty around the economic outlook has diminished since earlier in the year, the Committee notes that challenges remain and continued vigilance is warranted.

● Policymakers remain highly attentive to risks on both sides of their dual mandate. The unemployment rate remains low, near 4.2%–4.5%, and labor market conditions are described as solid. However, inflation is still somewhat elevated, with the PCE price index at 2.6% and core inflation forecast at 3.1% for year-end 2025, up from earlier projections; tariff-related pressures are cited as a contributing factor.

● The Committee acknowledged that recent economic activity has expanded at a solid pace, with second-quarter annualized growth estimates near 2.4%. However, GDP growth for 2025 has been revised downward to 1.4% (from 1.7% projected in March), reflecting expectations of a slowdown in the coming quarters.

● In the revised Summary of Economic Projections, the unemployment rate is expected to average 4.5% in 2025, and headline PCE inflation is forecast at 3.0% for the year, with core PCE at 3.1%. Policymakers continue to anticipate that inflation will moderate gradually, with ongoing risks from tariffs and global conditions.

● The Committee reaffirmed its data-dependent and risk-aware approach to future policy decisions. Officials stated they are prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede progress toward the Fed’s goals.

● As previously outlined, the Committee continues the measured run-off of its securities holdings. The pace of balance sheet reduction, which slowed since April (monthly redemption cap on Treasury securities reduced from $25B to $5B, while holding agency MBS cap steady at $35B), was left unchanged this month to support orderly market functioning and financial conditions.

● The next meeting is scheduled for 16 to 17 September 2025.

Next 24 Hours BiasMedium Bullish

Gold (XAU)

Gold’s current rally reflects a perfect storm of factors: dovish Fed expectations, political uncertainty, dollar weakness, robust institutional buying, and persistent geopolitical tensions. With buying momentum intact and structural demand from central banks providing a price floor, analysts maintain bullish outlooks with targets ranging from $3,700 to $4,000 in the coming months. The precious metal’s performance on Thursday, September 4, 2025, continues to validate its role as the premier safe-haven asset in an environment of monetary policy shifts and global uncertainties.

Next 24 Hours Bias

Weak Bearish

The Euro (EUR)

The Euro demonstrated resilience on September 4, 2025, benefiting from US dollar weakness while eurozone fundamentals remain mixed. With inflation slightly above target and growth remaining sluggish but stable, the ECB appears set to maintain its current policy stance through the remainder of 2025. The combination of contained trade tensions, stable inflation expectations, and gradual economic recovery supports the Euro’s recent strength, though challenges from political uncertainty and structural economic issues persist across the region.Central Bank Notes:

● The Governing Council kept the three key ECB interest rates unchanged at its July 24 meeting, maintaining the main refinancing rate at 2.15%, the marginal lending facility at 2.40%, and the deposit facility at 2.00%, following eight consecutive cuts preceding this decision.

● The decision to hold rates steady was driven by evidence that inflation is stabilizing near the Governing Council’s medium-term target of 2%. Policymakers communicated that further rate moves would be data-dependent, explicitly refraining from pre-committing to any future path amid persistent global and domestic uncertainties.

● According to the latest Eurosystem staff projections, headline inflation is expected to remain around 2.0% for 2025, with projections indicating 1.6% for 2026 and a rebound to 2.0% in 2027. Downward revisions from previous forecasts primarily reflect lower energy price assumptions and a stronger euro. Inflation excluding energy and food is seen averaging 2.4% in 2025 and 1.9% in 2026–2027, little changed from prior projections.

● Real GDP growth for the Eurozone is forecast at 0.9% in 2025, 1.1% in 2026, and 1.3% in 2027. The projections note that a strong first quarter offsets a weaker outlook for the rest of 2025. While business investment and exports are dampened by ongoing trade policy uncertainties—including recent U.S. tariff measures—rising government investment, particularly in defense and infrastructure, is expected to progressively underpin growth.

● Household spending should be supported by firm real income gains and a still-solid labour market. More favorable financing conditions are expected to help strengthen the economy’s resilience to further global shocks. Wage growth, although still elevated, continues to moderate, with profit margins partially absorbing cost pressures.

● Amid significant geopolitical and economic uncertainty, the Governing Council underscored its commitment to ensuring inflation stabilises sustainably at the 2% target. The ECB reiterated it would pursue a meeting-by-meeting, data-dependent approach to its monetary policy stance.

● Future rate decisions will be guided by the assessment of incoming economic and financial data, the outlook for inflation and underlying inflation dynamics, and the effectiveness of monetary policy transmission. The Council continues to stress that it is not pre-committed to any specific rate trajectory.

● The asset purchase programme (APP) and pandemic emergency purchase programme (PEPP) portfolios are continuing to decline in an orderly and predictable way, as the Eurosystem has ceased reinvesting principal payments from maturing securities.

● The next meeting is on 11 September 2025

Next 24 Hours Bias

Weak Bearish

The Swiss Franc (CHF)

The Swiss franc faces a complex environment on September 4, 2025. While the currency maintains its safe-haven appeal amid global uncertainties, it confronts significant headwinds from US tariff pressures and subdued domestic inflation. Today’s CPI release will be crucial for determining the SNB’s next moves, with markets pricing in potential further rate cuts or even a return to negative rates. The 39% US tariff represents the most significant challenge for the export-dependent Swiss economy, potentially forcing the SNB to adopt more accommodative policies to support growth while managing currency strength.Central Bank Notes:

● The SNB eased monetary policy by lowering its key policy rate by 25 basis points, from 0.25% to 0% on 19 June 2025, marking the sixth consecutive reduction.

● Inflationary pressure has decreased further as compared to the previous quarter, decreasing from 0.3% in February to -0.1% in May, mainly attributable to lower prices in tourism and oil products.

● Compared to March, the new conditional inflation forecast is lower in the short term. In the medium term, there is hardly any change from March, putting the average annual inflation at 0.2% for 2025, 0.5% for 2026, and 0.7% for 2027.

● The global economy continued to grow at a moderate pace in the first quarter of 2025, but the global economic outlook for the coming quarters has deteriorated due to the increase in trade tensions.

● Swiss GDP growth was strong in the first quarter of 2025, but this development was largely because, as in other countries, exports to the U.S. were brought forward.

● Following the strong first quarter, growth is likely to slow again and remain rather subdued over the remainder of the year; the SNB expects GDP growth of 1% to 1.5% for 2025 as a whole, while also anticipating GDP growth of 1% to 1.5% for 2026.

● The SNB will continue to monitor the situation closely and will adjust its monetary policy if necessary to ensure inflation remains within the range consistent with price stability over the medium term.

● The next meeting is on 25 September 2025.

Next 24 Hours Bias

Medium Bearish

The Pound (GBP)

The pound has demonstrated impressive short-term resilience, benefiting from US dollar weakness and better-than-expected UK economic data. However, the currency faces significant headwinds from fiscal uncertainties, elevated gilt yields, and persistent inflation pressures. The November 26th Budget represents a critical inflection point that could determine sterling’s medium-term trajectory, with market participants closely monitoring Chancellor Reeves’ fiscal strategy and its implications for the UK’s economic outlook.

Central Bank Notes:

● The Bank of England’s Monetary Policy Committee (MPC) voted on 7 August 2025 by a majority (exact split likely 5–3–1 or similar, based on expectations) to cut the Bank Rate by 25 basis points to 4.00%. Multiple members supported the move, citing fragile economic growth and signs of disinflation, while others preferred a larger reduction, and at least one member voted to hold the rate steady due to concerns about persistent inflation.

● The Committee unanimously decided to continue reducing the stock of UK government bond purchases held for monetary policy purposes by £100 billion over the next 12 months, targeting a balance of £558 billion by October 2025. As of 7 August, the gilt stock stands at £590 billion.

● Disinflation has been substantial since 2023 owing to policy tightening and the fading of external shocks. However, an unexpected uptick in headline CPI inflation—to 3.6% in June—reflects pass-through from regulated prices and earlier energy price rises, as well as signs of sticky core inflation.

● Headline CPI inflation is now 3.6%, above the Bank’s 2% target, reflecting regulated and energy price effects. The Committee expects inflation to remain around this level through Q3 before resuming its downward trend into 2026.

● UK GDP growth remains weak. Business and consumer surveys point to lacklustre activity, and the labour market continues to loosen, with increasing evidence of slack. Wage growth has softened but remains above pre-pandemic norms.

● Pay growth and employment indicators have moderated further, and the Committee expects a significant slowing in pay settlements over the rest of 2025.

● Global uncertainty remains elevated, especially with rising energy prices and supply disruptions linked to conflict in the Middle East and renewed trade tensions. These factors prompt the MPC to remain vigilant in monitoring cost and wage shocks.

● The risks to inflation are considered two-sided. With the outlook for growth subdued and inflation persistence less clear, the Committee argues that a gradual and careful approach to further easing is warranted, with future policy decisions highly data-dependent.

● The Committee’s bias is still towards maintaining monetary policy at a restrictive stance until there is firmer evidence that inflation will return sustainably to the 2% target over the medium term. Further adjustments to policy will be decided on a meeting-by-meeting basis, with scrutiny of developments in demand, costs, and inflation expectations.

● The next meeting is on 18 September 2025.

Next 24 Hours Bias

Weak Bearish

The Canadian Dollar (CAD)

The Canadian dollar faces multiple headwinds, including economic contraction, weakening employment, declining oil prices, and growing expectations for Bank of Canada rate cuts. While inflation has moderated below target, persistent core inflation and trade uncertainties are complicating the central bank’s policy outlook. The upcoming employment data on September 6 and the Bank of Canada decision on September 17 will be critical catalysts for the currency’s near-term direction.Central Bank Notes:

● The Bank of Canada maintained its target for the overnight rate at 2.75%, with the Bank Rate at 3% and the deposit rate at 2.70% as of July 30, marking the third consecutive meeting with rates on hold.

● The Council cited ongoing U.S. tariff adjustments and unresolved trade negotiations as driving factors for elevated economic uncertainty. The persistence of tariffs well above early-2025 levels continues to present downside risks for growth and keeps inflation expectations elevated, supporting a cautious approach to monetary easing.

● The lack of a clear U.S. policy path, plus frequent threats of additional tariffs, led the Bank to highlight risks to Canadian exports and broader demand, amplifying uncertainty about future growth.

● Canada’s economic growth in the first quarter came in at 2.2%, slightly stronger than the original forecast, while the composition of GDP growth was largely as expected. Consumption slowed from its very strong fourth-quarter pace, but continued to grow despite a large drop in consumer confidence.

● Canadian GDP growth is expected to be near 0% in Q2 2025, closely aligned with the more optimistic scenario outlined earlier in the year. Weakness in manufacturing activity—driven by both U.S. trade disruptions and sector-specific challenges like wildfires—contributed to softer output. A partial recovery is anticipated in Q3 due to rebuilding efforts and stronger retail sales in June.

● Consumer spending slowed, especially as households front-loaded durable goods purchases ahead of tariffs. Housing activity remains subdued, with resales and construction still soft despite some government tax relief measures.

● Headline CPI inflation continued to ease, holding close to 1.7% in June, aided by declines in energy prices following the removal of the fuel charge. However, the Bank’s measures of core inflation and underlying price pressures moved up further due to higher import costs from tariffs and lingering supply disruptions.

● The Governing Council reiterated that it will carefully weigh ongoing upward inflation pressure from tariffs and cost shocks against the gradual downward pull from economic weakness. While additional rate cuts remain possible, timing and scale will depend on trade policy developments and inflation’s path.

● The next meeting is on 17 September 2025.

Next 24 Hours Bias

Medium Bearish

Oil

Thursday’s oil market reflects a bearish sentiment driven primarily by expectations of increased OPEC+ production and broader supply surplus concerns. While geopolitical tensions and sanctions provide some support, fundamental supply-demand imbalances are weighing heavily on prices. The upcoming OPEC+ meeting on Sunday represents a critical inflection point, with any decision to increase production likely to extend the current downward pressure on oil prices through the remainder of 2025.Next 24 Hours BiasWeak Bullish

Source: IC Markets

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James Whitman

Economic

Commodity

Gold could rally to almost US$5,000 (RM21,157) an ounce if the Federal Reserve’s credibility were damaged and investors shifted just a small portion of holdings from Treasuries into bullion, Goldman Sachs Group Inc said.

“A scenario where Fed independence is damaged would likely lead to higher inflation, lower stock and long-dated bond prices, and an erosion of the dollar’s reserve-currency status,” analysts including Samantha Dart said in a note. “In contrast, gold is a store of value that doesn’t rely on institutional trust.”

Goldman’s note outlined a range of possible outcomes for the metal, with a baseline forecast for a surge to US$4,000 an ounce by mid-2026; a so-called tail-risk scenario of US$4,500; and an estimate of almost US$5,000 if just 1% of the privately owned US Treasury market were to flow into gold.

Bullion has been one of the strongest performing major commodities this year, rallying by more than a third and hitting a record earlier this week. The advance has been powered by central-bank accumulation and bets that the Fed will soon start to reduce US interest rates. Additional support has come more recently as President Donald Trump moved to assert greater control over the Fed, including a push to oust Governor Lisa Cook.

“We estimate that if 1% of the privately owned US Treasury market were to flow into gold, the gold price would rise to nearly US$5,000 an ounce, assuming everything else constant,” the analysts said. “As a result, gold remains our highest-conviction long recommendation in the commodities space.”

Source: Bloomberg

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Gerik

Commodity

Silver's Market Boom and Price Forecasts

Silver is experiencing an unprecedented surge in both domestic and international markets, with prices reaching their highest levels in over a decade. On September 3, 2025, silver prices hit 43 million VND per kilogram in Vietnam, marking a near 42.5% increase since the start of the year. Internationally, silver traded at $40.7 per ounce, up 38% from the beginning of the year, and an impressive 45.6% compared to the same time last year. This surge is part of a broader rally that has captivated investors, particularly in Vietnam, where demand for silver bars and coins has skyrocketed.

The sharp increase in silver prices can be attributed to several key factors. Firstly, expectations that the U.S. Federal Reserve will lower interest rates have prompted investors to seek refuge in precious metals, including silver. Additionally, geopolitical tensions and the growing trend of "de-dollarization" are driving silver's appeal as a safe haven asset. Silver's increasing demand from industries such as solar energy, electric vehicles, and artificial intelligence further bolsters its price trajectory.

Supply Constraints and Industrial Demand

Rhona O'Connell, head of market analysis at StoneX, points out that silver's strong demand from critical industries, such as solar energy and electric vehicles, is likely to create long-term upward pressure on prices. The supply of silver is struggling to keep pace with the increasing demand, making it a key driver of the metal's price growth. Despite recent price highs, O'Connell suggests silver may experience short-term adjustments but remains bullish in the long term, with sustained demand fueling further growth.

Nick Cawley from Solomon Global forecasts that silver could exceed $44 per ounce by the end of 2025, driven by a confluence of factors such as loose monetary policy, geopolitical uncertainties, and a shift away from U.S. bonds. He believes that silver will benefit from both its industrial demand and its role as a safe-haven asset, similar to gold. Cawley anticipates further price increases, with $50 per ounce being a possible target if buying momentum continues.

Christopher Lewis from FXEmpire also sees silver holding strong at $40 as a new support level, predicting a short-term rally towards $42 per ounce. He suggests that any price dips should be viewed as buying opportunities, rather than signals to sell.

Silver's Growing Popularity in Vietnam

In Vietnam, where gold has traditionally dominated as a popular investment asset, silver is emerging as a strong contender. With gold becoming increasingly scarce and stock markets showing volatility, many investors are turning to silver as a more accessible alternative. Silver is now seen as a "new version" of goldoffering both a safe-haven function and a connection to the green industrial revolution.

Silver is poised to continue its upward trajectory in 2025, driven by factors ranging from monetary policy shifts to strong industrial demand. With experts predicting further price increases, silver is becoming an attractive investment option not just in Vietnam but globally, positioning itself as a key asset for 2025 and beyond.

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Samantha Luan

Economic

Political

Forex

South Korea's pledge to invest $350 billion in strategic U.S. industries as part of a trade deal with Washington is likely to be led by state policy institutions that will provide funding on a case-by-case basis, the country's vice finance minister said.Under a trade deal struck in July to cap U.S. tariffs at 15%, the countries agreed to a financial package to support industries such as shipbuilding, key minerals, batteries, pharmaceuticals, chips and AI, although officials in Seoul have said details on implementing the plan still need to be hashed out.

"We basically look at the $350 billion as a limit so it won't be raised all at once, but rather we will be able to provide support tailored to situations that may arise," Lee Hyoung-il said on Wednesday in an interview with Reuters."We plan to prepare it (the package) through policy financial institutions basically," Lee said, declining to confirm whether policy lender Korea Development Bank would be orchestrating the operation.

"Nothing has been decided on the issue," an official at the KDB said.

State-run lenders such as the KDB provide policy financing and manage funds for public infrastructure and financial market stability.Lee's comments build on assurances from other top Seoul officials that the investment pledge is designed to support commercially viable U.S.-based projects on a capital-call basis as demand arises.The two sides have appeared at times to interpret the fund differently. A South Korean presidential adviser last month denied U.S. claims that Washington would take 90% of the profit from the $350 billion investments.

Turning to Wednesday's global bond rout, Lee downplayed concerns that South Korea's bond and foreign exchange markets could face instability due to jitters around debt sales and fiscal discipline.South Korea plans to issue a record amount of bonds next year to fund spending in sectors including AI, semiconductors, research and defence.Lee said authorities would continue to monitor foreign exchange markets and "act to stabilise markets if needed", while conducting talks with the U.S. Department of the Treasury on the dollar-won market.

He added the government will review whether the dollar-won trading hours can be further extended, as part of Seoul's push to be included in MSCI's developed market benchmarks.On the broader economy, Lee expects a recovery to accelerate next year when Asia's fourth-largest economy is forecast to grow 1.8%, around its potential growth rate, from a projected expansion of 0.9% this year.