Asia wrap: Gold roars past $3,500

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Asian screens flickered green, but it was the faint kind of rally you get when traders are more focused on hedging their calendars than chasing new highs. Japan and Korea clawed back some of Monday’s stumbles. At the same time, China and Hong Kong sagged proof that liquidity firehoses and record margin trading balances alone can’t levitate everything when tariff shadows and policy risk loom overhead.

But the real showpiece wasn’t equities. It was Gold vaulting to a fresh record north of $3,500 before trimming its sails. That’s not just a price tick; it’s the market’s confession that faith in fiat is wobbling. Every ounce at these levels screams: the dollar is being asked fewer questions, and bullion is being asked to answer more of them.

This isn’t just about a potential September cut. It’s about the character of the Fed itself. With Trump leaning hard on Powell and Cook’s chair suddenly looking unbolted, the institution’s independence looks less like granite and more like clay. Governors may not outvote the FOMC yet, but they hold the quiet power to reappoint all 12 regional bank presidents in 2026. That’s the long fuse hidden under the chair. Waller, openly calling for aggressive easing, is already being whispered as the next chair—markets know it, and gold knows it best.

If Cook is forced out, the bloc of loyalists grows. Stack them together and you don’t just get cuts you get a Fed willing to bend before political weather rather than stand against it. That narrative is seeping into every bond auction and every foreign-exchange blotter.

On the macro front, payrolls have stumbled like a drunk across cobblestones. Revisions have already hollowed out May and June, leaving them as shells of the “strong economy” story. If the next print tips negative a rarity outside recession—the September 17th cut isn’t just probable, it’s mandatory. October and December follow like dominoes. That path isn’t fully priced, which makes the next jobs report not a data point but a tripwire.

Treasuries resumed after the holiday with a bull-steepener: the front end heavy with cut conviction, the long end wary of inflationary fallout. Japanese 10s rallied after a robust auction, underscoring how global appetite for safe duration spikes when the Fed’s compass looks bent. The yen slipped another 0.3%, a reminder that in FX land, the carry baton is still being passed around even as the music threatens to stop.

Gold is no longer a sideshow: central banks have made gold the second-largest reserve asset, overtaking the euro. India, China, Turkey, Poland—big hands are buying. ETFs are sucking in flows. And the metal has nearly doubled since early 2023. If the dollar is losing prestige, gold is auditioning for the role of understudy. The script has already been written by central bankers who now hold one-fifth of official reserves in bullion.

September has always been a cruel month for markets, but this one carries more than seasonality. It carries the question of whether the Fed bends or breaks. Every asset on the board is reacting: stocks are braced, the yen feels heavy, and gold has declared itself the only grown-up in the room. The jobs data, the Fed call, and the politics around them aren’t just variables—they’re the fuse box. Flip the wrong switch, and volatility doesn’t just return; it detonates.