Gold Hits Record High as Global Asset Divergence Continues

The global financial markets witnessed a rare and dramatic reshuffling in August, with precious metals and agricultural commodities emerging as the biggest winners. Gold surged 9.7% for the month to close at $4,437 per ounce, while silver soared an even more aggressive 15.6%. The Strait of Hormuz blockade and El Niño weather patterns pushed food inflation higher, contributing to the rally in precious metals.

The long-end rates also saw significant increases, with the U.S. 30-year Treasury yield hitting a multi-year high of 5.31% on August 17. Germany's 30-year bund yield reached 3.81% on August 31, its highest level since 2011, while Japan's 30-year JGB yield touched an all-time high of 4.14%.

The Fed Chair Kevin Warsh's hawkish remarks at the Jackson Hole symposium further reinforced rate-hike expectations, with the probability of a September rate hike jumping to 65%. The decision to expand long-bond buybacks by the U.S. Treasury also raised concerns about financial repression.