On Friday (September 11, Beijing time) in early Asian trading, spot gold was trading around $4,320 per ounce. Gold prices fell on Thursday as US PPI data met expectations and rising oil prices exacerbated inflation concerns, pushing up expectations of interest rate hikes. The market is now focused on today's CPI data. Oil prices surged more than 7% on Thursday, with both major indicators surpassing the $100 per barrel mark. The Houthi rebels, allied with Iran, seized control of the port of Mocha in Yemen on Thursday, posing a new threat to Red Sea shipping. Meanwhile, shipping in the Gulf region via the Strait of Hormuz remains restricted. Trump warned that the US might strike the hill near Iran's badly damaged Natanz uranium enrichment facility. As the weekend approaches, geopolitical risk premiums are intensifying.

Key Focus Today

stock market

U.S. stocks closed lower on Thursday, with all three major indexes falling. The August producer price index rose in line with expectations, but the conflict with Iran disrupted supply routes through the Strait of Hormuz and the Red Sea, and oil prices continued to rise, exacerbating inflation concerns and reinforcing expectations of a Federal Reserve rate hike next week. Meanwhile, Treasury yields climbed, with the 10-year yield reaching its highest level in nearly three years, the 30-year yield hitting a more than 19-year high, and the 2-year yield rising to its highest level in more than two years. The S&P 500 fell 0.58% to 7591.75, the Nasdaq fell 0.65% to 26081.73, and the Dow Jones Industrial Average fell 0.60% to 52064.10. The S&P 500 has fallen 2% over the past four trading days, with nine of its 11 sectors declining. The materials sector led the decline, falling 1.45%, followed by the information technology sector, which fell 0.91%. Nvidia fell 2.3%, Micron fell 4.7%, and Apple rose 3.6%. CME Group's FedWatch tool shows traders expect a 70% probability of the Federal Reserve raising interest rates by at least 25 basis points next week, up from about 64% before the report was released. Investors are closely watching Friday's August consumer price data.

Gold Market

Gold prices fell on Thursday, with spot gold down 1.91% to $4,316.72 an ounce, as U.S. inflation data and rising oil prices spurred increased market bets on a Federal Reserve rate hike next week. U.S. producer price index (PPI) rose 0.4% month-over-month in August, with the July reading revised to a 0.1% increase. Kyle Rodda, senior financial markets analyst at Capital, said the data suggests a slight increase in underlying inflationary pressures in the U.S. economy, partly due to rising energy costs. The CME FedWatch tool showed traders expect a 70% chance of a U.S. rate hike next week, up from 62% before the data release, but most economists surveyed expect the Fed to keep rates unchanged at its September 15-16 meeting and for the remainder of the year. A stronger dollar made dollar-denominated gold more expensive for buyers holding other currencies, and rising benchmark 10-year U.S. Treasury yields further pressured gold prices. The largest increase in attacks on shipping since the start of the war between the U.S. and Iran raised concerns about supply disruptions. Rodda added that rising oil prices mean inflation will remain higher and more persistent, which bonds must reflect, leading to a decline in gold prices. Meanwhile, the European Central Bank raised interest rates for the second time this year on Thursday to curb war-induced, energy-price-driven inflation. Spot silver fell 5.5% to $64.56 per ounce, spot platinum fell 5.5% to $1,791.13, and spot palladium fell 5.1% to $1,283.52.

oil market

Oil prices surged on Thursday, with both benchmarks breaking through $100 a barrel, as attacks on shipping increased most sharply since the start of the war with Iran, exacerbating traders’ concerns about further disruptions to already tight supplies. Brent crude rose 7.22% to settle at $108.93 a barrel, while WTI crude rose 7.51% to settle at $103.93 a barrel, both hitting their highest levels since May 19 and marking their biggest single-day gains in nearly two months. The Houthi rebels, allied with Iran, seized control of the Yemeni port of Mocha on Thursday, posing a new threat to Red Sea shipping, while shipping through the Strait of Hormuz in the Gulf region remained restricted. Simon-Peter Massabni, head of business development at XS, said the Yemeni attacks on Saudi energy facilities have created new market risks, extending concerns beyond Iran and the Strait of Hormuz to include the risk of supply disruptions spreading to export routes, oil production facilities, and other energy infrastructure in the region. US President Trump warned that the US might strike the hill near Iran's badly damaged Natanz uranium enrichment facility, stating that the war could continue beyond the November midterm elections. Iran said it attacked 10 ships near the Strait of Hormuz on Wednesday after the US attacked five Iranian oil tankers, and the Iranian Islamic Revolutionary Guard Corps said it would increase its response to any further attacks. Analysts say the sustainability of this oil price rally will depend on the world's largest crude oil importer. The U.S. Energy Information Administration reported that U.S. crude oil inventories fell by 391,000 barrels to 424.1 million barrels last week, as refining activity remained strong, compared to analysts' expectations of a 1.55 million barrel decrease. A copy of the Organization of the Petroleum Exporting Countries' monthly report released Thursday showed that the organization lowered its 2026 global oil demand growth forecast to 380,000 barrels per day, marking the fifth consecutive downward revision of its forecast.

Foreign exchange market

The dollar index rose 0.3% on Thursday to close at 99.05, recovering some of the losses from earlier in the week; the dollar was boosted by U.S. producer price data that met expectations and strengthened expectations of a Federal Reserve rate hike next week. The euro fell 0.18% to 1.1611 against the dollar after the European Central Bank (ECB) raised interest rates by 25 basis points, as expected, marking its second rate hike this year. The ECB aimed to curb rising inflation driven by energy prices following the Iran war. The euro immediately weakened after the announcement, as markets worried that further rate hikes by the ECB to control inflation would impact the economy. The probability of further ECB rate hikes has increased, making this a hawkish decision. However, the main driver of the dollar's overall strength was the PPI. The market was quite nervous ahead of Friday's CPI data release, as the CPI is the real focus. Bank of America analyst Alex Cohen stated that strong CPI could trigger a brief rebound in the dollar, but sustained dollar strength may require further action from the Federal Reserve. Soaring oil prices also supported the dollar after the Houthi rebels, allies of Iran, seized the port of Mocha in Yemen, exacerbating concerns about disruptions to Red Sea shipping. Tanker passage through the Strait of Hormuz remains restricted. The yen retreated against the dollar after rising for three consecutive trading days, having gained more than 6% since market intervention in late July, but still near a seven-month high as markets anticipate a rate hike by the Bank of Japan next week. The U.S. Treasury intervened in the market in late July alongside the Bank of Japan to support the yen, selling euros rather than dollars. Earlier this week, U.S. Treasury Secretary Bessenter expressed support for using Washington's financial power as a foreign policy tool, and the Treasury also announced on Thursday an expansion of its bond repurchase operations to curb rising long-term Treasury yields.

International News

The US Treasury Department announced sanctions against individuals and entities in Iran. On September 10, local time, the US Treasury Department issued a statement saying that as part of its "economic isolation" operation against Iran, the Office of Foreign Assets Control (OFAC) will add individuals and entities supporting Iran's proxy network in the Middle East to its sanctions list. The sanctions include members of Hezbollah. On August 24, US Treasury Secretary Bessenter announced a new round of sanctions against Iran as part of the "economic isolation" operation, aiming to further increase pressure on Iran. (CCTV News) Houthi rebels occupy strategic Hanish Islands in the Red Sea. Yemeni government officials said on the 10th that after the government navy withdrew from the strategically important Hanish Islands in the Red Sea, the Houthi rebels had deployed troops on the islands. That evening, the Yemeni government forces designated an area on the country's west coast as a "combat zone." The anonymous government official told Xinhua News Agency that after the Yemeni government navy withdrew from the Hanish Islands on the afternoon of the 10th, the Houthi rebels immediately entered and established military positions on the islands. (Xinhua) Iran Resumes Ballistic Missile Production US Middle East officials revealed that Iran is using stockpiled components to assemble liquid and solid propellant ballistic missiles at multiple underground facilities, including Hojjar. While production is limited compared to pre-war levels, it has resumed. The large-scale attacks by the US and Israel in the early stages of the war severely damaged Iran's industrial base and import channels, but failed to completely paralyze its capabilities. Iran still has a potential production capacity of hundreds to thousands of missiles and continues to launch missiles at US military bases in the Middle East. Experts point out that missile programs are more dispersed and regenerated faster than nuclear programs, highlighting the difficulty of complete destruction. The US claims to have destroyed approximately 90% of its related industrial base, and Iran is still rebuilding facilities. Meanwhile, Trump's Venezuelan oil project plans to increase production by 150% by 2028. North American Blue Energy Partners (NABEP), a Venezuelan oil producer supported by the US government, plans to more than double its crude oil production in just over two years, as part of the Trump administration's plan to boost production in the South American country. The company currently produces approximately 200,000 barrels per day and aims to increase production to 500,000 barrels per day by the end of 2028, a plan to be funded by internal cash flow. Some analysts believe NABEP's plans appear ambitious, raising concerns about the service side of the business and the potential need to raise funds to support expansion. Bessant stated the US Treasury market is in "very good condition," and the smaller-than-expected repurchase volume did not change his optimistic tone. US Treasury Secretary Bessant attempted to downplay market concerns on Thursday about a smaller-than-expected scale of Treasury bond repurchase operations, while also mitigating concerns about a sharp rise in US Treasury yields. He stated that the current US Treasury market is in "very good condition." Bessant specifically mentioned the strong performance of two Treasury auctions in recent days and reiterated the unusually high correlation between bonds and energy prices recently. Previously, the two-year Treasury yield had reached its highest level since 2024, and the 10-year yield had also risen to its highest level since 2023. Factors triggering this sell-off included soaring oil prices and the Treasury's actual repurchase of fewer bonds than expected. The Treasury announced on Wednesday plans to repurchase up to $6 billion in bonds, but the actual repurchase amount on Thursday was only $5.19 billion. Bessant explained, "We only repurchase bonds when prices are low," but in this instance, bondholders seemed more inclined to hold onto their long-term securities. He stated that the Treasury typically receives approximately $20 billion in selling offers, but this time it only received about $10 billion. OPEC Lowers Oil Demand Growth Forecast for the Fifth Consecutive Time OPEC's monthly report shows that OPEC lowered its 2026 global oil demand growth forecast to 380,000 barrels per day, marking the fifth consecutive downward revision. The oil-producing organization still believes the impact on consumption since the outbreak of the Iran war has been less than other forecasting agencies such as the International Energy Agency, which predicts a decline in demand in 2026. The report also shows that while OPEC lowered its oil demand growth forecast for this year, it raised its 2027 forecast. OPEC raised its 2027 global oil demand growth forecast to 2.36 million barrels per day (previously 2.16 million barrels per day). The 2026 global oil demand growth forecast has been lowered to 380,000 barrels per day (bpd) (previously 580,000 bpd). OPEC and former member UAE crude oil production averaged 38.05 million bpd in August 2026, an increase of approximately 300,000 bpd from July. Russian oil production in August fell by 160,000 bpd from July to 8.718 million bpd.

Domestic News

Lu Lei, Vice Governor of the People's Bank of China (PBOC): The PBOC will regularly issue treasury bonds and central bank bills to enrich the high-grade RMB asset pool . On September 10, at a press conference held by the State Council Information Office, Lu Lei stated that during the 15th Five-Year Plan period, the PBOC will continue to support the healthy development of the offshore RMB market, optimize the layout of RMB clearing banks, improve the multi-tiered and cross-maturity liquidity supply mechanism, maintain sufficient and stable RMB liquidity in the offshore market, and regularly issue treasury bonds and central bank bills to enrich the high-grade RMB asset pool. (Xinhua News Agency) Li Bin, Spokesperson and Deputy Director of the State Administration of Foreign Exchange (SAFE): Continue to expand policies facilitating cross-border financing for technology companies. On September 10, at a press conference held by the State Council Information Office, Li Bin stated that the next step will be to improve the level of capital account openness, coordinate capital account openness and RMB internationalization, and promote the deepening of capital account openness from channel-based to institutional-based, from business facilitation to entity facilitation, and from foreign exchange management to the coordination of domestic and foreign currencies. In the area of direct investment, new measures to facilitate cross-border investment will be introduced successively, taking into account the demands of enterprises. In the area of cross-border financing, policies to facilitate cross-border financing for technology companies will be further expanded, and the scope of pilot policies for facilitating foreign exchange for green foreign debt will be broadened. In the area of cross-border securities, efforts will be made to align the rules for opening up the securities trading market with international standards, promote the integration of open channels, optimize systems, and unify rules, thereby enhancing the level of two-way opening up of the financial market. (Xinhua News Agency)