US President Donald Trump indicated that any military action against Iran would be limited in scope, while also stating that the situation in the Strait of Hormuz remains highly stable and that substantial oil volumes continue to transit the waterway. Trump once again emphasised his view that interest rates are excessively high, though he expressed deep respect for Federal Reserve Chair Warsh. Treasury Secretary Bessent remarked that US sanctions are exerting significant economic strain on the Iranian regime, which he suggested prompted the recent military response. Bessent affirmed that Washington will maintain its pressure campaign, adding that while Iran's economy does not necessarily need to collapse, the regime must "return to reason." On monetary policy, Bessent declined to speculate on potential Federal Reserve actions and denied any efforts to influence bond market movements. He also noted that the yen market has already priced in expectations, expressing confidence that both the Japanese government and central bank will implement measures to strengthen the currency.

Turning to futures market activity, data from 2026-08-31 shows that the main Shanghai gold contract opened at 997.00 yuan per gram, settled at 961.92 yuan per gram, marking a decline of 3.74% from the prior session's close. Trading volume stood at 41,087 lots with open interest of 129,725 lots. During the overnight session, the main gold contract opened at 961.00 yuan per gram and closed at 959.84 yuan per gram, down 0.22% from the afternoon settlement. For silver, the main Shanghai contract opened at 17,284.00 yuan per kilogram and settled at 16,293.00 yuan per kilogram, a decrease of 5.36% from the previous session's close. Volume reached 1,214,308 lots with open interest standing at 239,957 lots. The overnight silver session saw the main contract open at 16,280 yuan per kilogram and close at 16,212 yuan per kilogram, down 0.50% from the afternoon close.

US Treasury Yields and Market Indicators

On 2026-08-31, the US 10-year Treasury yield settled at 4.73%, an increase of 0.06% from the previous session. The yield spread between 10-year and 2-year notes stood at 0.39%, narrowing by 0.08% from the prior day. Exchange data reveals that in the Au2610 contract, long positions increased by 3 lots while short positions declined by 3 lots. Total trading volume for Shanghai gold contracts reached 807,009 lots, down 20.03% from the previous session. In the silver market, the Ag2610 contract saw long positions decrease by 44 lots while short positions increased by 2 lots. Total silver contract volume reached 2,005,308 lots, representing an increase of 16.55% from the prior session.

ETF Holdings and Arbitrage Metrics

Precious metals ETF holdings remained steady, with gold ETF holdings at 1,042.357 tonnes, unchanged from the previous session. Silver ETF holdings also held flat at 15,359.92 tonnes. On the arbitrage front, the domestic gold premium was recorded at 26.20 yuan per gram, while the domestic silver premium reached 740.20 yuan per kilogram. The gold-to-silver ratio on the Shanghai Futures Exchange stood at approximately 59.04, down 2.44% from the prior session, while the overseas ratio was 65.50, declining 2.40% day-on-day.

Physical Market Fundamentals

Data from the Shanghai Gold Exchange for 2026-08-31 shows gold trading volume of 68,462 kilograms, down 20.50% from the previous session, while silver volume surged 60.23% to 396,904 kilograms. Gold delivery amounted to 11,872 kilograms, with silver delivery recorded at 7,620 kilograms. Market sentiment suggests that growing risk appetite may slightly dampen demand for gold as a safe haven, yet the broader upward trajectory for precious metals remains intact. The recent pullback could present more attractive entry points, with gold prices likely to maintain a range-bound yet firm tone. The Au2610 contract is expected to trade within a range of 950-980 yuan per gram.

For silver, a similarly cautious but positive stance is adopted, with prices anticipated to remain in a consolidation pattern. The Ag2610 contract is expected to fluctuate within a band of 16,000-17,000 yuan per kilogram. Arbitrage opportunities and option strategies are currently being deferred, given the risk of overseas liquidity concerns and the ongoing exit of speculative positions from the market.

Risk Statement

This report is based on publicly available information believed to be reliable; however, no guarantee is made regarding its accuracy or completeness. The views, conclusions, and forecasts expressed herein reflect the perspectives and judgments as of the publication date. The authors accept no legal liability for any losses incurred by investors relying on this report, and independent judgment is encouraged. All rights reserved, and any reproduction or distribution without prior written permission is prohibited.