Macro analyst Zhang Chen (F0284349, Z0010567) of Yide Futures offers a rapid overview of key takeaways.
Outlook
Gold: Long-term monetary attributes provide solid support, and the likelihood of setting new all-time highs remains high; lows below 4,000 are unlikely to reappear. Silver/platinum/palladium: Independent rallies are difficult to sustain, and excess returns must wait until macro-financial pressures ease and risk appetite recovers.
Risk points
Unexpected monetary policy moves by the U.S., European, and Japanese central banks; unexpected developments in great-power rivalry and geopolitics.
Summary
August served as the rebound window for precious metals in the third quarter, with macro and meso-level factors resonating to drive prices higher. During most other periods, precious metals consolidated and corrected, mainly because the resilience of the U.S. economy and inflation forced the Federal Reserve to restart tightening policy, while rising dollar and real interest rates suppressed precious metals through their financial attributes. Compared with the first half of the year, order-reconstruction factors shifted from implicit to explicit, providing strong support for gold prices during the correction process. Looking ahead to the fourth quarter, the market faces mixed bullish and bearish factors, and whether rate-hike expectations peak and retreat is the key to whether gold can break above its August high. Order-reconstruction factors such as disputes over Fed policy independence and U.S. Treasury intervention in interest rates and foreign exchange markets will continue to raise the floor for gold, making lows below 4,000 unlikely to reappear. Supported by monetary attributes and the historical pattern of staggered gold-silver price peaks, gold has a relatively high probability of setting new highs over the medium to long term. The 4,000-4,200 dollar range still offers allocation value, and buying on dips is recommended; if a trend inflection point is confirmed, allocations to silver and platinum can be increased.
Core View
In the third quarter, order-reconstruction factors gradually became explicit, and the 10-year U.S. Treasury term premium briefly surged significantly. In the fourth quarter, the Federal Reserve will continue to face pressure from the government, and independence concerns may reignite. The core bearish factor currently suppressing gold prices still comes from private-sector selling triggered by rising holding costs. After the September rate hike, the market saw a short-term exhaustion of bearish factors rather than a comprehensive one, mainly because uncertainty remains over the terminal rate. According to Taylor rule calculations, the theoretical terminal rate for this tightening cycle may slightly exceed 5%, a bit higher than the current market pricing of about 4.9%. Market rate-hike expectations tend to be more hawkish than actual policy, so there is still room for rate-hike expectations to rise. This may continue to push up U.S. Treasury yields, and a comprehensive exhaustion of bearish factors for the precious metals sector still requires waiting. In the third quarter, the dollar index was driven by short-end interest rate differentials, first weakening and then strengthening. Looking ahead to the fourth quarter, geopolitical and energy price issues will continue to disturb the market, and the dollar is expected to remain strong in the short term, with the midterm elections as a key variable: if Democrats sweep Congress, it will constrain coordination between the Treasury and the Fed, bullish for the dollar; if the two parties split the Senate and House, the policy landscape will remain unchanged, and upward momentum for the dollar will be weaker.
Risk points
Unexpected monetary policy moves by the U.S., European, and Japanese central banks; unexpected developments in great-power rivalry and geopolitics.
01. Review of the 2026 Third-Quarter Precious Metals Market
In the third quarter, the precious metals sector reversed the weakness of the second quarter and staged a clear rebound and recovery, with performance ranking from strongest to weakest as platinum > silver > gold > palladium. As of September 18, the main Shanghai gold contract rose 7.6% for the quarter, the main Shanghai silver contract rose 13.1%, and the main Guangzhou Futures platinum and palladium contracts rose 14% and 5.5%, respectively. Compared with domestic prices, which were relatively weak due to the sustained strength of the renminbi exchange rate, overseas contracts posted larger gains than domestic ones: over the same period, New York gold and silver rose 9.8% and 13.1%, while platinum and palladium rose 15.7% and 6.2%. In terms of rhythm, July and September were mainly consolidation and correction periods, with the main gains occurring in August, largely boosted by the temporary easing of Middle East geopolitical tensions, Treasury and Fed policy measures and external communications that reinforced order-reconstruction factors again, and other factors. Since September, renewed Middle East geopolitical conflicts, persistently high oil prices, and strengthened Fed rate-hike expectations have all dampened bullish sentiment. After the September rate hike landed, the market briefly saw a "bearish factors exhausted" move, but rate-hike expectations continued to strengthen after strong economic data were released, and precious metals weakened.
02. The Ongoing Tug-of-War Between Macro Reality and Long-Term Narratives
In the third quarter, repeated "TACO" behavior by the Trump administration regarding Middle East geopolitical tensions, the Treasury's August refunding meeting breaking convention by announcing that coupon Treasury and floating-rate note issuance sizes would remain unchanged for at least the next several quarters, combined with subsequent repo intervention, and Fed Chairman Warsh's near "sharp turns" in remarks at different meetings continued to strengthen the order-reconstruction narrative from both internal and external dimensions. On the geopolitical front, Trump's repeated "TACO" approach reduced his administration's credibility, and the market priced around his pressure index range. Meanwhile, the Treasury under Bessent abandoned its long-held "regular and predictable" framework, suspending long-bond increases and allowing the share of short-term debt to keep rising; Warsh abandoned forward guidance and did not clearly signal his reaction function to the market, "jumping" between hawkish and dovish positions at two similar meetings. These behaviors all caused the 10-year U.S. Treasury term premium, a volatility component measuring the strength of risk compensation, to strengthen periodically. In addition, the Trump administration's infringement on Fed independence returned, as after sending another letter to Fed Governor Cook in August threatening to remove her from office, Trump himself repeatedly attacked the committee, attributing the inability to cut rates smoothly to "unfriendly forces" within the committee. Therefore, it is foreseeable that in the fourth quarter, the Fed will continue to face pressure from the government on all fronts, and some infringement actions may actually materialize, with independence threats likely to draw renewed focus.
In our semi-annual report, we estimated gold-selling behavior under order-repair pricing caused by Middle East geopolitical tensions, and by comparing with different historical stages, we concluded that this short-term impact was insufficient to change the overall picture. The significantly revised central bank gold purchase data released with a lag also provided confirmation in line with expectations. Similar to before, the overall macro bearish factor for gold prices still lies in private-sector selling, a decision made in response to rising meso-level holding costs. After the Fed's rate hike landed, monetary policy had effectively turned, and the terminal rate and expectation gaps will become important references for judging when bearish factors are fully exhausted.
03. Meso-Level Holding Cost Bearish Factor Not Yet Exhausted
Before the September FOMC meeting, we predicted the Fed's potential dot plot based on market expectations, noting that market expectations pricing more than four hikes for the entire tightening cycle would likely cover the dot plot after the hawkish shift at that meeting, and we expected the market to see a "short-term" exhaustion of bearish factors after the meeting. Why short-term rather than comprehensive? Mainly because of uncertainty over the terminal rate. Unlike the previous preventive rate-cut cycle, where cuts and pauses aimed at the neutral rate, this rate-hike cycle is not only a helpless response to repeated geopolitical energy supply shocks, but also a key action in Fed Chairman Warsh's self-"redemption." In the short term, the most hawkish estimate for the tightening cycle may be the theoretical rate-hike space above 5% calculated using the Taylor rule, slightly higher than the current market-priced terminal rate of about 4.9%. Therefore, considering that market rate-hike expectations usually go further and more hawkish than actual policy, and referring to the above theoretical pricing, current market rate-hike expectations still have some room to rise. This means that although the current 10-year U.S. Treasury yield has broken above 5% and set a new high in more than 20 years, the upward trend may continue as rate-hike expectations rise, so for precious metals, the market still needs to wait for a "comprehensive" exhaustion of bearish factors.
On the dollar side, the third-quarter dollar index's dip-then-rally was mainly driven by short-end U.S.-German interest rate differentials. In June, the ECB started hiking for the first time in nearly three years ahead of the Fed and hinted at further hikes within the year, causing the U.S.-German rate differential to trend lower in July and August and pressuring the dollar into adjustment; then, after Fed Chairman Warsh announced at the late-August Jackson Hole central bank symposium that he would take inflation seriously and rebuild institutional credibility, Fed rate-hike expectations quickly gained momentum and fermented. After the Fed's first hike landed in September, the geopolitical deadlock, the Fed's reaction function shifting completely toward inflation, and deepening follow-up rate-hike expectations jointly supported the U.S.-German rate differential in continuing higher, driving a dollar rebound. Looking ahead to the fourth quarter, geopolitical developments remain pivotal: on one hand, persistently high energy prices may leave Europe stretched during the heating season, pressuring the economy while igniting the spread of populism. On the other hand, considering the stated intention to shelve negotiations before the U.S. midterm elections, the dollar is expected to remain strong in the short term with geopolitical support. The current baseline forecast for the midterm elections is that Republicans will struggle to maintain a sweep against Democrats, and if Democrats complete a sweep, it may constrain the current mode of Treasury-Fed coordination, potentially deepening the bullish impact on the dollar. If the two parties each control one chamber, the status quo may be maintained, the Trump administration's "twilight" tendency will be greatly reduced, and upward momentum for the dollar will also be limited.
04. Micro-Level Speculative Funds See Some Return
In the third quarter, broadly consistent with the sector's price trend, CFTC speculative net-long positioning in gold, platinum, and palladium all rebounded from the end of the second quarter. As of September 15, CFTC speculative net-long positions in gold, platinum, and palladium were 230,000 contracts, 15,000 contracts, and -4,000 contracts (actually a speculative net short of 4,000 contracts), respectively, up 18.7%, 1.5%, and 0.4% from the end of the second quarter. Although silver prices posted the largest gain, speculative net-long positioning declined over the same period, possibly indicating that the rally was not driven by overseas futures. Over a longer horizon, speculative funds continued their net outflow trend during the year, with only gold, as third-quarter restocking of speculative net-long positions approached the level at the start of the year. Looking ahead, continued return of speculative funds is key to sustaining the bottoming-out and recovery trend, especially in gold, where speculative net-long positioning has historically been highly positively correlated with prices, making it the focal point for observing fund flows in the sector. Total open interest was also broadly consistent with price and speculative net-long trends. As of September 18, average third-quarter open interest in New York gold and silver was 397,000 and 109,000 contracts, respectively, down from the same period last year; platinum and palladium were 59,000 and 18,000 contracts, respectively, also declining. This was partly because CME frequently raised margin levels and even adjusted margin collection methods multiple times early in the year to raise risk control standards, forcing some speculative funds to passively reduce positions or even shift to options; on the other hand, lower total open interest also means some funds have cashed out and have not fully returned.
05. Supply and Demand
Central bank gold purchases are back on track; the platinum supply-demand gap has shifted from deficit to surplus.
On gold, the World Gold Council's second-quarter Gold Demand Trends report showed that, including over-the-counter demand, total global gold demand in the second quarter was flat year-on-year at 1,268.9 tonnes. The ranking of sub-items returned to the traditional pattern of jewelry > investment > central banks > technology. Specifically: second-quarter jewelry demand fell 12.4% year-on-year to 310.3 tonnes, the lowest since the second quarter of 2020, with relatively high prices still weighing heavily on it; second-quarter investment demand fell sharply by 46.1% year-on-year to 262.2 tonnes, mainly because ETF investment, after contributing positively for seven consecutive quarters, turned into a drag in the quarter; bar and coin demand changed little, down only 2.7% year-on-year to 307.1 tonnes, marking seven consecutive quarters above 300 tonnes in a single quarter; central bank gold purchases returned above 200 tonnes in the second quarter, after first-quarter data were substantially revised down, making the second-quarter purchase volume of 288.9 tonnes surge 411% quarter-on-quarter and also record 62.4% year-on-year growth; technology gold use in the same period was 80.4 tonnes, up 2.2% year-on-year, with the electronics industry contributing the only increase. Based on monthly ETF holdings data published by the World Gold Council, global gold ETFs added nearly 145 tonnes cumulatively in July-August (of which the North America region where SPDR is based added about 54 tonnes, and SPDR added more than 37 tonnes). Current high-frequency data show that as of September 22, SPDR added nearly another 14 tonnes. After the Fed restarted rate hikes, central banks in developed economies collectively entered a tightening cycle, and investment demand will face some pressure. Looking ahead to the fourth quarter, with geopolitical tensions expected to evolve toward easing, central bank gold purchases are still expected to support demand. Under Taylor rule guidance, although rate-hike expectations may not have peaked theoretically, current market expectations of more than four hikes are gradually approaching the theoretical upper limit, and the drag on investment demand from Fed monetary tightening is expected to be limited. On supply, total global gold supply in the second quarter was basically flat, with lower prices causing recycled gold supply to fall 5.9% year-on-year to 326.1 tonnes, the lowest since the third quarter of 2024; second-quarter gold mine production rose 1.9% year-on-year to 965.6 tonnes, the highest for any second quarter on record, basically offsetting the decline in recycling supply.
On silver, based on inventory data, delivery data, and the more high-frequency iShares Silver ETF holdings changes, the global silver structural shortage problem from late last year to early this year continued to ease in the third quarter. On inventories, global visible inventories accumulated for five consecutive months from April to August, and the inventory flow from Comex to LBMA late last year continued to reverse. With global silver ETFs reducing holdings overall during the year and releasing inventory (iShares Silver ETF still reduced holdings by more than 1,000 tonnes during the year), after delivering twice last year's volume in the first two months of this year, cumulative Comex silver futures deliveries in the first eight months were only 7,370 tonnes, down 16% year-on-year, also showing shrinking physical demand from one angle. Whether the structural shortage problem can reignite later will largely depend on improved ETF allocation demand consuming visible inventories, but against the backdrop of the Fed restarting rate hikes during the year, such a scenario is highly unlikely.
On platinum, the latest data from the World Platinum Investment Council show that in the second quarter of 2026, global platinum recorded a second consecutive quarter of oversupply. On one hand, both the mining and recycling sides of supply rose 8% and 1% from the first quarter, jointly supporting total supply up 1% year-on-year and 6% quarter-on-quarter to 59.3 tonnes; on the other hand, on the demand side, industrial demand turned the tide and offset declines in automotive, jewelry, and investment demand, lifting second-quarter total demand 11% quarter-on-quarter to 51.7 tonnes, though still down 16% year-on-year. Considering that the supply side will struggle to maintain first-half growth in the second half, and that under the negative factors of inflation and Fed rate hikes, investment demand is unlikely to see a major recovery in the second half, the shift in the supply-demand gap from deficit to surplus is unlikely to change. On annual data, global platinum is expected to shift to an oversupply of 8.2 tonnes in 2026 due to weaker demand, the first time in nearly four years. On the corresponding demand side, total global platinum demand in 2026 is expected to be 220.5 tonnes, down 18% from 2025. By sub-item, automotive demand, the largest category, continues its decline since 2024, shrinking 4% from 2025 to 90.3 tonnes; industrial demand returns to second place among demand categories with growth from 2025, expected to rise 5% to 74.2 tonnes; due to high prices, jewelry demand and investment demand fell notably, with the former at 58.6 tonnes, down 15% from 2025, and the latter plunging 107% to -2.6 tonnes, the lowest in nearly four years. On the supply side, stimulated by higher prices, total global platinum supply is expected to rise slightly by 2% in 2026 to 228.7 tonnes, the highest in nearly four years, mainly supported by recycled platinum rising 9% for a second consecutive year of growth to 56.1 tonnes, while mined platinum output at 172.7 tonnes is not much different from 173 tonnes in 2025, as a slight increase in output from South Africa, the largest mined platinum producer, roughly offsets declines in several other producing countries.
06. Fourth-Quarter Precious Metals Outlook
Reviewing the overall third-quarter performance of precious metals, the only rebound window, August, occurred during a phase when geopolitical tensions eased, rate-hike expectations weakened, and the dollar fell sharply amid yen intervention, a period of resonance among macro and meso-level factors, while also being confirmed by micro-level fund flows. Outside that period, the consolidation and correction phase was mainly affected by factors that ran through the year: under the geopolitical deadlock, the resilience of the U.S. economy and sticky inflation forced the Fed's policy tone and actions to shift, pushing up the dollar and real interest rates and creating pressure through financial attributes. Unlike the first half, order-reconstruction factors moved from "hidden" to "explicit," undoubtedly providing extremely strong support during the above correction process. Looking ahead to the fourth quarter, bullish and bearish factors are intertwined, and whether rate-hike expectations peak and retreat is the key to precious metals exceeding their August highs. But one thing is certain: order-reconstruction factors such as the battle over Fed independence and the Treasury's internal and external coordinated intervention in interest rates and foreign exchange markets will gradually raise the floor for gold, the directly benefiting品种, and the lows below 4,000 seen in the first half are very difficult to revisit. Technically, referring to gold, the weekly rebound has already taken shape, and it is currently in a daily pullback process. Supported by monetary attributes and the historical pattern of staggered gold-silver peaks, gold still has a high probability of continuing to set new highs over the medium to long term. For gold prices in the 4,000-4,200 dollar range, allocation value remains, and buying in batches on dips is recommended. Once a turning point is confirmed, allocations to silver and platinum can be appropriately increased.
Editor: Wu Yujie; Reviewer: Kou Ning (F0262038, Z0002132); Final review: Yu Xinyue. Report completion date: September 25, 2026. Trading advisory business qualification: CSRC License [2012] No. 38. Sina partner platform futures account opening, safe, fast, and guaranteed.