Gold Stutters as Rate Hike Odds Increase

The prices of precious metals, particularly gold, came under pressure at the end of last week as investors increased their expectations of a U.S. Federal Reserve rate hike at its upcoming policy meeting. Meanwhile, trade figures from China highlighted a sharp rise in Russian gold entering the country through Hong Kong.

Spot gold in London fell as much as 1% to around $4,385 an ounce before recovering above the closely watched $4,400 mark. The decline followed the previous week’s 1.2% drop, triggered by stronger-than-expected U.S. employment data that pushed the market-implied probability of a September rate increase close to 60%.

Silver also weakened, sliding as much as 1.2%. The metal remains particularly sensitive to economic conditions because industrial applications account for roughly 60% of annual demand.

Despite the renewed pressure from interest-rate expectations, gold remains close to its record highs. MKPS PAMP’s Nicky Shiels noted that the metal’s resilience while the Fed is considering higher rather than lower rates demonstrates the strength of the underlying demand, particularly amid geopolitical uncertainty.

At the same time, Hong Kong trade data points to a major shift in Russian gold flows toward China. Hong Kong imported over 3 tons of Russian-origin gold in 2021, representing 0.6% of its non-monetary gold imports. By last year, that figure had climbed to over 92 tons.

The increase has accelerated dramatically in 2026. Hong Kong received more than 112 tons of Russian gold between January and July, equivalent to 14.7% of its reported gold inflows for the period.

The surge follows Western sanctions imposed after Russia’s invasion of Ukraine, which effectively removed newly produced Russian bullion from the professional market in London after the London Bullion Market Association suspended six Russian refiners in 2022.

Hong Kong’s broader gold trade is also expanding. The city handled over 765 tons of non-monetary gold during the first seven months of the year, putting it on track to exceed its 974-ton annual record from 2023. In June, imports surpassed 150 tons, the strongest monthly figure in more than a decade.

China’s central bank continues to add bullion as well. The People’s Bank of China increased its gold reserves by 20 tons last month to 2,387, extending its buying streak to 22 consecutive months.

Elsewhere, Brent crude rose 1.7% toward $97 a barrel as renewed tensions between the United States and Iran around the Strait of Hormuz heightened oil-market concerns, while the U.S. dollar index slipped 0.2%. Oil prices have since climbed above $100 and intensified inflation concerns.

As global markets continue evolving in response to the ongoing conflict in the Middle East and the outcome of the September meeting of the Fed, companies like Numa Numa Resources Inc. could tweak their strategies aimed at maintaining investor inflows into their gold projects.

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