Gold price review and key observations: Last week, London spot gold settled at $4,454 per ounce (down 3.2% week-over-week), while domestic AU9999 gold closed at 995 yuan per gram (up 1.4% week-over-week). Friday evening saw international gold prices plunge more than 3%, driven by the hawkish remarks from Fed Chair Kevin Warsh.

On the evening of August 28 Beijing time, Warsh delivered his first keynote address since taking office at the Jackson Hole Global Central Bank Symposium, widely seen as his most significant policy communication attempt in his first 100 days. His tone on inflation was notably firmer than in July, making it clear that inflation remains the Fed's primary concern. Warsh reaffirmed the 2% PCE inflation target as unwavering and, in a rare move, acknowledged that the Fed bears "direct responsibility" for the 65-month stretch of elevated inflation. He noted that while summer inflation data showed some improvement, "these figures do not tell me that the underlying inflation trend has seen substantial progress," insisting that the Fed must be confident base inflation is returning to the 2% target "clearly and at a sufficiently fast pace, otherwise, we still have work to do."

Additionally, Warsh expressed the view that economic resilience remains strong and that current financial conditions are not restrictive. He pointed to robust corporate capital expenditure, an unemployment rate around 4.1%, low credit spreads, strong corporate bond issuance, and relatively loose commercial and industrial lending standards, stating bluntly that "it is difficult to characterize the overall financial environment as restrictive." The market interpreted this as: if financial conditions are not tight, there is no reason for the Fed to abandon the rate hike option out of concern for the economy. Following the hawkish remarks, rate hike expectations were reignited, with interest rate futures showing the probability of a September hike rising to 57%, and the timing of a second hike moving forward to December this year.

In terms of asset performance, both short-end and long-end U.S. Treasury yields moved higher, the U.S. dollar index recovered significantly, and London gold fell more than 3%. However, we believe that the difficulty of implementing a rate hike this year remains substantial. Warsh's hawkish stance appears more like a carefully crafted "public relations move" designed to salvage the Fed's credibility, rather than a full and unfiltered display of his true policy position. At the July FOMC meeting, Warsh proposed the idea that "the market has already done part of the tightening work for the Fed," hinting that rising long-end yields could substitute for actual rate hikes. This vague statement sparked market doubts about his commitment to fighting inflation.

Combined with the Treasury Department's subsequent expansion of long-duration bond buybacks with minimal effect, the market grew concerned that the Fed might be forced to backstop the fiscal mess, intensifying questions about its independence. Against this backdrop, the Jackson Hole symposium became a window Warsh had to seize to "rebuild trust." But rather than focusing on what he "says," greater attention should be paid to what he "does." If a September rate hike fails to materialize, it would deal another heavy blow to the Fed's credibility, and at that point, gold's role as a hedge against dollar credit concerns would once again come to the forefront.

Furthermore, two economic data releases before the September FOMC meeting deserve attention — this week's employment figures and next week's inflation data. If both employment and inflation continue their downward trends, the Fed's motivation to raise rates would be further weakened. Looking ahead, volatility in Fed policy expectations is likely to remain significant, potentially creating turbulence for assets like gold, though we believe there is still room for rate hike expectations to fade.

Over the medium to long term, the continued deterioration of the U.S. fiscal deficit, the intractable debt problem, and sustained central bank gold purchases amid de-dollarization trends all reinforce the strengthening case for gold as a hedge against dollar credit risk. Key signals for gold investment in the coming week: (1) U.S. August employment data; (2) U.S. August manufacturing and services PMI; (3) developments in the U.S.-Iran situation. Related products include Hua'an Gold ETF (518880) / Feeder Fund A (000216) / Feeder Fund C (000217) and Hua'an Gold Stock ETF (159321).

Comparison of RMB-denominated gold prices with international gold price trends. Risk disclosure: Investors should be aware of the specific risks of investing in gold-themed funds, including the risk of gold market fluctuations, the risk of deviation between fund portfolio returns and domestic gold spot price returns, and the investment risks of the Shanghai Gold Exchange gold spot market. The gold stock ETF is an equity fund that primarily invests in the constituent stocks of the underlying index and backup constituent stocks, carrying risk-return characteristics similar to the underlying index. The gold stock ETF may invest in Hong Kong Stock Connect eligible stocks, which will face exchange rate risks and specific risks arising from differences in the investment environment, investment targets, market systems, and trading rules under the Stock Connect mechanism. Fund management companies do not guarantee that the above funds will be profitable, nor do they guarantee minimum returns. Past fund performance does not predict future returns. China's fund operation history is relatively short and cannot reflect all stages of stock market development. Market risk exists, and investment decisions should be made with caution at one's own risk. Before investing in funds, investors should carefully read the Fund Contract and Prospectus and other fund legal documents, comprehensively understand the risk-return characteristics of fund products, and on the basis of understanding product conditions and listening to the appropriateness opinions of sales institutions, make independent decisions on fund investment based on their own risk tolerance, investment horizon, and investment objectives, and choose appropriate fund products.