The Overnight Report: Gold’s Unrelenting Ascent

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Technology stocks and Nasdaq were back in the driver's seat overnight as US yields moved lower and gold sliced through US$3,600.

After Monday's retreat, ASX200 futures are pointing to another soft start for the local index.

Good Morning,

The ASX200 closed down -22pts or -0.24% on Monday to 8,850. Energy and banks led the index down with technology and healthcare stocks posting gains.

What happened overnight: NAB Markets Today Research extract

It was a quiet start to the week. US yields extended Friday’s post-payrolls decline, the 10yr yield down another -3bp to 4.05%. The dollar was down another -0.3% on the DXY even as the yen underperformed following Ishiba’s resignation. US equities show modest gains. The S&P500 was 0.25% higher. The Euro Stoxx 600 index closed up 0.5%.

US Treasury yields are -1-3bps lower and the curve modestly flatter out to 10yrs, but the 30-year outperformed, with yields down -7bps. The 10-year yield is at a five-month low near 4.04%. The deepening of cut expectations post payroll has modestly extended. There are -72bp of cuts priced over the next 3 meetings, from -69bp at the end of last week, and -150bp by the end of next year, from -147bp on Friday and -142bp ahead of payrolls.

The easing labour market has made the case for 2-3 cuts this year, but the extent of cuts priced in 2026 looks vulnerable to further signs of resilience in activity indicators in 2H 2025, which could translate into some steadying in the labour market as the tariff and policy uncertainty shock fades. The median projection at the June FOMC had -75bp of total cuts out to the end of 2026, even with an unemployment rate projection of 4.5%.

In FX, the USD is broadly weaker, down 0.3% on the DXY. Otherwise broad-based declines against G10 currencies were mitigated by underperformance of the JPY and CAD. The Canadian dollar was up just 0.2% against the dollar, following the country’s own soft jobs numbers Friday. The JPY was little changed, paring earlier losses after Ishiba’s weekend resignation alongside the broadly weaker dollar. USDJPY touched an intraday higher of 148.58 before falling back to 147.46.

The political backdrop was the last barrier to clear to an October hike, but with uncertainty now looking set to overhang Japan until a new LDP leadership vote takes place pricing for an October hike has pared to 6bp, from 10 mid last week. One of the leading candidates, Takaichi favours more stimulatory policy settings, which could mean higher long-term rates and a weaker yen. Going against the global grain, Japan’s 30-year bond yield rose 3bps to 3.27% yesterday.

The euro was 0.4% higher at 1.1762, showing little rection to the expected loss of a confidence vote by French Prime Minister Bayrou. The AUD was 0.5% higher at 0.6593, coming very close to 66c intraday with a higher of 0.6599. The NZD outperformed, up 0.8%.

China trade data yesterday showed exports growth slowing to 4.4% yoy from 7.2%, a little below expectation but weighed by base effects. A plunge in exports to the US have been offset by resilience elsewhere. Imports were up 1.3% yoy, slowing more than expected and weighed by imports of construction materials, a sign of sluggish domestic demand. Also of note was evidence of a rebounding rare earth’s exports to the US, a key part of the trade truce.

Japan’s Q2 GDP data was revised higher to up 0.5% QoQ from  up 0.2% QoQ. Inventories drove the revision, though consumption growth was also revised higher, from 0.2% QoQ to 0.4% QoQ.

Gold’s relentless charge, Stephen Inness, SPI Asset Management extract

Gold has once again stormed higher, smashing through US$3,600 an ounce, leaving traders squinting at their screens as if the tape were glitching. But this is no bad tick, it’s the logical crescendo of a market where rate-cut wagers, political meddling, and creeping stagflation fears are converging into a perfect tailwind for bullion.

The metal has ripped 9% in the past three weeks and nearly 40% year-to-date, a performance that makes equity benchmarks look pedestrian and has left bondholders muttering about the futility of duration. Friday’s soggy labour print was the accelerant, weak enough to cement the view that Powell’s hand is forced into action. Now the street is fully pricing in a -25bp trim next week, with some desks leaning toward a jumbo -50bp. In trader shorthand: the real rate profile is heading negative again, and gold thrives when bonds can’t keep pace with inflation.

But it’s not just monetary arithmetic driving this melt-up. The political backdrop has turned gold into the ultimate protest asset. Trump’s tariff salvos have already juiced stagflation chatter, and his courtroom push to fire Fed governor Lisa Cook is cutting straight to the heart of central bank independence. Traders know this script, when faith in the Fed wobbles, gold becomes the one institution that doesn’t default, dilute, or lie.

Add in the fact that global central banks have been hoovering up bullion for years, to the point where gold now outranks the euro as a reserve asset, and you get a structural bid beneath the rally. Meanwhile, foreign investors are quietly rotating out of Treasuries, the dollar has dropped over -10% against peers this year, and the world’s most liquid safe haven looks increasingly tarnished. If Treasuries are suspect and the greenback is sliding, what’s left? The answer is already glowing on every trader’s P&L sheet.

Even the tariff confusion that briefly rattled the bullion market last month, when customs floated the idea that imported bars might be taxed has been resolved in gold’s favour. The White House has now exempted bullion from those levies, removing the one oddball obstacle to physical flows into the US.

What we’re watching is not just a rally, but a repricing of trust itself. Gold isn’t yielding, innovating, or compounding. It’s simply absorbing the market’s collective disbelief in paper promises. At US$3,600, it’s no longer just an inflation hedge; it’s a referendum on the system. And if the currents continue, negative real rates, stagflation risk, dollar erosion, and political assault on the Fed, the trajectory doesn’t end here. Traders who once scoffed at whispers of US$5,000 are suddenly finding themselves rerunning the math, this time without irony.

On the surface, the dollar looks deceptively steady. Despite the noise swirling around the Fed, the slide in front-end yields, and a weakening jobs pulse, the greenback hasn’t cracked. Equities are still outperforming global peers, tariffs appear to be absorbed better than feared, and relative fiscal messes abroad, from Paris to Westminster, have given some of the remaining dollar bulls just enough rope to argue the bear market is over.

But scratch beneath that veneer of resilience, and the picture darkens. The dollar’s supposed stability is more illusion than foundation. What the market is brushing aside is the very force that will keep gold’s rally alive: real yields collapsing while the Fed’s tolerance for inflation rises.

The Fed has quietly lowered the bar for cuts. With tariffs bleeding through to consumer prices, inflation is sticky, not transitory. That means market rates are headed lower while inflation refuses to follow suit, a one-two punch that historically saps the dollar’s strength and supercharges gold. Negative real rates are like rocket fuel for bullion.

Add to this the growth outlook. U.S. GDP is set to slow to barely 1% by late 2025, with only marginal improvement into 2026. Friday’s limp labor data already hints at stalled hiring. This doesn’t sound like an economy outpacing the world, it sounds like a patient sliding toward stagnation. Against that backdrop, the market has scope to price a deeper easing cycle, especially at the belly of the curve. Lower yields invite foreign investors to hedge away their dollar exposure, draining support for the currency while reinforcing flows into gold.

Meanwhile, policy divergence is working against the greenback. The ECB is in no rush to ease, and the Bank of England has even struck a hawkish tone. If the Fed is cutting while Europe and the UK hold back, the relative rate differential tilts decisively against the dollar. That’s another tailwind for bullion.

Layer on the governance risk. Trump’s public battle with the Fed, efforts to remake its board, and the gnawing sense that the world’s most important central bank is no longer fully insulated from politics, all chip away at the dollar’s premium as the globe’s reserve anchor. In moments like this, gold isn’t just an inflation hedge, it becomes an institutional hedge.

And while dollar skeptics love pointing to fiscal frailty in Europe and the UK, America is hardly immune. The debt trajectory, yawning deficits, and heavy Treasury issuance will keep term premium alive in U.S. markets, undermining the very bond market that has long supported the greenback’s reserve status.

When you string it all together, the case is clear. The dollar’s apparent resilience is a façade masking eroding real rates, sagging growth, dovish Fed leanings, and rising political interference. That mix is toxic for the greenback and electric for gold.

Gold doesn’t need the dollar to collapse, it just needs the illusion of its strength to fade. And that process has already begun.

Corporate news in Australia

-Morgan Stanley is mandated to sell US$459m worth of B class shares in New York listed News Corp and US$900m worth of B class share in Fox Corporation after the resolution of a long running settlement dispute.

-Woolworths Group ((WOW)) and Coles Group ((COL)) face -$1bn in underpaid staff costs.

-Qantas Airways ((QAN)) lifts frequent flyer points needed to redeem business and premium economy seats through its Classis Plus Rewards scheme.

-Mayne Pharma ((MYX)) has denied the takeover by Cosette threatens its Adelaide facility.

-BHP Group ((BHP)) is looking to sell Nickel West.

-Cobram Estate Olives ((CBO)) is in a trading halt ahead of a capital raising.

-ANZ Bank is cutting -3,500 jobs by next September as part of a major restructuring.

On the calendar today:

-NZ 2Q Mfg Activity

-AU NAB Bus Survey

-JP Aug Machine orders

-US Aug NFIB

-US July Consumer Credit

-BLUESCOPE STEEL LIMITED ((BSL)) ex-div 30.00c (50%)

-CSL LIMITED ((CSL)) ex-div 248.50c

-DUSK GROUP LIMITED ((DSK)) ex-div 2.00c (100%)

-GQG PARTNERS INC ((GQG)) FUM & Flows

-IVE GROUP LIMITED ((IGL)) ex-div 8.50c (100%)

-MOTORCYCLE HOLDINGS LIMITED ((MTO)) ex-div 5.00c (100%)

-NEWS CORPORATION ((NWS)) ex-div 10.84c

-PERSEUS MINING LIMITED ((PRU)) ex-div 5.00c

-REGIS HEALTHCARE LIMITED ((REG)) ex-div 9.13c (70%)

-SPARK NEW ZEALAND LIMITED ((SPK)) ex-div 10.99c

-WAGNERS HOLDING CO. LIMITED ((WGN)) ex-div 3.20c (100%)

FNArena’s four-weekly calendar: https://fnarena.com/index.php/financial-news/calendar/

The Australian share market over the past thirty days…

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