Gold prices have turned extremely volatile, swinging sharply on uncertainty over the Federal Reserve's September interest rate decision. On September 7, international gold prices fluctuated wildly, touching an intraday high of $4,435 per ounce and a low of $4,381, before spot gold climbed back above the $4,400 mark around 21:50 Beijing time, trimming its decline to 0.65%. This represents a drop of roughly $300 per ounce from the peak seen on August 25.
According to data from Hithink Flush Information, international gold prices (using London spot gold as a benchmark) first experienced a rapid rally starting in early August. Between August 3 and August 25, prices surged 15.24%, climbing from the $4,000 level to approach $4,700 per ounce. However, in the five trading days following that peak, gold posted consecutive losses, with a cumulative decline of 7.08% from August 26 to September 1. On August 28 and September 1, single-day drops each approached 3%, pushing prices below the $4,400 threshold and settling at $4,327.28 on September 1. From September 2 to September 4, prices rebounded above $4,400 again, closing at $4,430.52 on September 4.
In the domestic jewelry market, gold ornament prices at several major brands fell below 1,330 yuan per gram on September 7, down 80 yuan per gram from the August 25 peak. Chow Tai Fook reported a price of 1,329 yuan per gram, down 81 yuan from the August high; Luk Fook Jewellery was at 1,327 yuan, also down 81 yuan; and Lao Feng Xiang stood at 1,326 yuan, a decline of 80 yuan per gram.
Where the market stands now
The recent wide swings in international gold prices are largely attributed by market consensus to speculation over whether the Fed will raise rates in September. In a keynote speech at the Jackson Hole global central bank symposium on the evening of August 28 Beijing time, Fed Chair Kevin Warsh reiterated that the 2% inflation target is "firm and fixed," adding that if underlying inflation fails to fall clearly and quickly enough, the Fed "still has work to do." This was widely interpreted as Warsh's clearest acknowledgment to date that a rate hike may be necessary. Heightened rate hike expectations triggered the largest one-day drop in gold prices during that period.
But on September 3, Fed Governor Christopher Waller struck a dovish tone, cooling expectations for a rate increase. The dollar index fell 0.56% that day, providing a boost to gold, which advanced 2.09%. Then on September 4, the release of U.S. August non-farm payroll data, which came in far stronger than expected, rekindled rate hike bets and pushed gold down 1.08% for the session. In an ironic twist, however, gold found solid support near the $4,365 level and staged a sharp V-shaped rebound, reclaiming most of its losses.
Why the non-farm data had limited impact is because the market believes the key figures that could determine the September decision are the inflation data due this weekend. On Thursday, September 10, the U.S. Bureau of Labor Statistics will release the August Producer Price Index (PPI), followed by the August Consumer Price Index (CPI) on Friday, September 11. Wall Street's major institutions remain divided on whether a September hike will materialize: BofA Securities argues the data will be strong enough to support a hike, while Citi anticipates further cooling in core inflation, making it more likely the Fed holds steady.
The August CPI report is shaping up to be the decisive battle for a September rate move. BofA notes that even if the composition of the inflation data does not raise major alarms, it is unlikely to give the Federal Open Market Committee sufficient reason to delay a hike. The September 11 data release will be the most critical test yet for the near-term direction of Fed policy. Citi, by contrast, projects U.S. core CPI rose just 0.184% month-over-month in August, with the annual rate falling to 2.3%. If that materializes, it would mark the lowest annual core reading since April 2021, when core CPI first topped 2%, and would be enough to prompt most policymakers to keep rates unchanged. According to the latest CME FedWatch data, the probability of the Fed holding rates steady in September stands at 42%, while the odds of a 25-basis-point hike are 58%.
The shifting data has made investors cautious. SPDR Gold Shares, the world's largest gold ETF, saw its holdings fall to 1,052.06 tonnes, marking two consecutive days of outflows, though it had added more than 14 tonnes cumulatively on September 1 and 2.
Global central banks repositioning bullion
Meanwhile, there is an unusual trend emerging in the gold market this year: global central banks are relocating their gold reserves. The Dutch central bank announced on September 2 that it transferred roughly 86 tonnes of gold reserves from New York and Ottawa to London between March and August of this year, a move aimed at diversifying risk and preparing for crisis response. According to the bank's press release, about 59 tonnes were shifted through sales in New York and purchases in London, while more than 27 tonnes were physically transported from the U.S. and Canada to Zeist in the Netherlands. An equivalent quantity of gold meeting international market standards was then moved from Zeist to London.
Dutch central bank data shows that as of the end of 2025, the Netherlands held 612.4 tonnes of gold reserves, primarily stored in Zeist, London, New York, and Ottawa. Following this adjustment, the proportion held in Zeist remained unchanged at 30.8%, while the share in New York dropped sharply from 31.3% to 18.5% and in Ottawa from 19.7% to 18.5%. The share held in London rose from 18.1% to 32.1%.
France has gone even further. Between July 2025 and January 2026, the Bank of France transferred 129 tonnes of gold in 26 separate batches, bullion that had been stored at the New York Fed since the late 1920s, representing 5% of its gold bar reserves. The approach was the same: sell in New York, buy in Europe, with all new bars remaining in Paris. Because gold prices surged during the transaction period, the operation generated capital gains of approximately €12.8 billion, of which €11 billion was recorded in the 2025 fiscal year. France's entire 2,437 tonnes of gold reserves are now back on home soil, with the custodial balance in New York reduced to zero. Bank of France Governor de Galhau explained that the older bars were mostly non-standard specifications that did not meet the London Bullion Market Association's 99.99% purity requirements, making it more cost-effective to melt them down or purchase new bars rather than shipping them back. He insisted there was no political motive behind the move.
Germany was the earliest mover. After announcing a plan in 2013 with an original target of 2020, it completed the repatriation three years ahead of schedule in August 2017, bringing back a total of 674 tonnes and 53,780 gold bars from New York and Paris. Each bar was individually tested upon arrival in Frankfurt for authenticity, purity, and weight, with no issues found. Even so, Germany still keeps approximately 1,236 tonnes of gold at the New York Fed, accounting for about 37% of its reserves.
Serbia announced in July 2025 that it would repatriate its entire gold reserves, totaling roughly 50.5 tonnes. India has also been moving gold reserves back home in recent years, reducing its overseas storage ratio from 55% to 22%. The World Gold Council's 2026 central bank gold reserve survey shows that over the past 12 months, 19% of central banks increased the share of gold held domestically or diversified their storage locations, up from just 7% a year earlier. The number of central banks holding bullion in New York and London vaults continues to decline.
Qu Rui, senior deputy director of the research and development department at Golden Credit Rating, said in an interview that in the short term, gold prices are likely to fluctuate widely within the $4,300 to $4,600 per ounce range, with the direction depending on August U.S. inflation data and the September FOMC meeting. Over the medium term, he maintains a view of "a slowly rising center with broad volatility," with a core trading range of $4,200 to $4,700 per ounce. Looking ahead, the trend of central banks diversifying the locations of their overseas gold holdings, particularly those stored in the United States, is becoming increasingly established.