China Post Securities in a non-ferrous metals report said a strong dollar is
keeping base metals under pressure. US August nonfarm payrolls beat
expectations, raising the probability of a September Fed rate hike. July core
PCE remains below the 2% target; if August CPI does not move materially toward
2%, a September hike cannot be ruled out. The report sees little chance of
consecutive hikes, so a September increase could mark the peak of tightening and
represent bad news exhausted. From an allocation perspective, central banks are
materially adding to gold reserves, making gold’s floor more evident. The house
views a September hike as likely; if a hike triggers a price pullback, that
would be a clear buying opportunity for precious metals.
