Gold Prices Influenced by Multiple Factors Beyond Fed Hikes
Texas has become the largest state to recognize gold and silver as legal tender, following in the footsteps of Utah, which did so in 2011. The new law, effective September 1, 2026, requires that gold and silver 'specie' carry a stamped weight and purity to qualify for use under the law. However, no business is obligated to accept it.
The recognition is based on Article I, Section 10 of the Constitution, which has implications for other states. A second phase of the plan, a Bullion Depository-backed payment system, is expected to be implemented by May 2027.
In a separate development, Jan van Eck, CEO of VanEck Funds, told Bloomberg Businessweek that he doesn't think US inflation is driving gold's price. He believes gold's value lies elsewhere and breaks with the 'debasement trade' framing commonly used on Wall Street.
Meanwhile, Turkey's Finance Minister Mehmet Şimşek has expressed concern about the $640 billion in gold and foreign currency that locals keep outside of the banking system, calling it a drag on the formal economy. However, an economist at Istanbul's Koç University counters that this habit is a rational response to decades of currency devaluation and periodic banking crises.
In Hong Kong, the government has committed to launching its central clearing and settlement system for gold in the first quarter of 2027 as part of its five-year plan. This move shows that gold infrastructure is being treated as core financial strategy by the government.
Finally, India's gold demand is improving ahead of Dhanteras and Diwali, with jewelry buying and ETF inflows continuing to rise. Total Indian gold demand rose 1.8% year over year to 281.5 tonnes in the second quarter, despite a soft first half.