Gold slips below $4,450 as Warsh lifts hike bets, yen tests 160

Gold extended Friday's slide after Fed Chair Kevin Warsh's hawkish Jackson Hole speech lifted rate-hike bets, the yen led our strength gauge but slid back to 160.00 against the dollar, and China's factory PMI beat forecasts without leaving contraction.

Major currencies

• The dollar headed into Friday's close on course for a weekly gain of close to 1% after Federal Reserve Chair Kevin Warsh's Jackson Hole speech on Friday, which the wires read as putting a September hike back in play — the two-year Treasury yield soared on the remarks. It hands a little of that back at the Asian open, easing against the euro and the pound.
• The Japanese yen tops our intraday strength gauge — but not against the dollar. USD/JPY opens the week around the 160.00 mark, just below Friday's one-month high. Last month's joint Japan-US intervention came with the pair near 164 and drove it to 155.45, so the climb back has retraced about half of it. Japan's factory output beat a Reuters poll looking for a 0.7% contraction and retail sales rebounded sharply, firming the case for the Bank of Japan hike markets price for 17-18 September. US Treasury Secretary Scott Bessent called the yen's recent moves "pretty well contained" and not disorderly — a comment about its renewed weakness, not its strength.
• The Australian dollar is today's weakest major, trading near 0.7160 after opening at a bearish gap, a second session lower. The four-day climb topped out at 0.7206 on Friday, its highest since mid-May, before Warsh's speech knocked it 0.30% off that high. Q2 inventories will take 0.3 percentage points off growth in Wednesday's national accounts.
• The euro edges higher to around 1.1590, holding near 1.1600 ahead of German preliminary CPI.
• The New Zealand dollar trades near 0.5910, a second subdued session, paring losses after China's PMI beat. ANZ business confidence slipped to 53.7 from 56.1, and the Reserve Bank of New Zealand (RBNZ) decides on Wednesday: its shadow board mostly backs 25 basis points, and a poll cited by InvestingLive has 90% of economists expecting a hike.
• Sterling bounces off a one-week low against a softer dollar, recovering part of Friday's heavy losses, though UK markets are shut for a bank holiday — thin cover for the month-end rebalancing flows BNY flagged as leaving the pound exposed after its strong run.

Geopolitics & commodities

• Gold slipped to around $4,445, below $4,450, extending Friday's slide: the metal shed more than 2.50% after the hawkish Warsh remarks and closed the week in the red, taking out the $4,566 low it printed on Thursday. The $4,700 ceiling is a full leg behind.
• WTI crude oil gives back part of a bullish opening gap but holds above $83.50, trading near $83.60. US Central Command struck Iranian rocket launchers that were preparing to lay mines in the Strait of Hormuz — the first attack in weeks, per Bloomberg — and Iran has fired missiles in response.
• China's official manufacturing PMI rose to 49.8 in August from 49.2, above the 49.7 market consensus but still below the 50 line that separates growth from contraction. The non-manufacturing index steadied at 49.0.
• Canada's Q2 GDP came in at 3.3% annualised on Friday against a 3.4% estimate. The CFTC report for the week to 25 August has CAD short covering leading a broad positioning shift, alongside renewed gold buying — positioning taken on just before Friday's slide. Section 338 duties and Ottawa's retaliation still take effect on 8 September.
• US Treasury Secretary Bessent is set to press the G20 on China's $1.2 trillion trade surplus.

Key events today

• CNY · China Official Manufacturing PMI: RELEASED — 49.8 vs forecast 49.5 (market consensus 49.7), previous 49.2
• CNY · China Official Non-Manufacturing PMI: RELEASED — 49.0, unchanged from previous
• EUR · German Prelim CPI m/m: SCHEDULED — forecast 0.3% vs previous 0.8%
• GBP · Bank Holiday: UK markets closed
• All · G20 Meetings: SCHEDULED

Market metrics

Our proprietary metrics show an MRS of 57, two below Friday's 59, with the FSI back up to 71 (Greed) from 68 and the CTS at 79. JPY is the strongest currency today, while AUD is the weakest. That is two sessions running with the yen on top — the first back-to-back leader since at least 10 August, and the tell Friday's weekly wrap left open.