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On September 29, 2026, the Asia-Pacific precious metals market saw a key trading day, with gold prices breaking through $4300/ounce intraday, hitting a two-week high, and silver prices strengthening in tandem to reach $28/ounce. This trend is driven by the interplay of multiple factors, including Fed dovish signals, rising geopolitical risks, and sustained global central bank gold purchases. For Asia-Pacific investors, current market volatility presents allocation opportunities, requiring strategies tailored to macro environments and individual needs.
I. Fed Policy Shift: Dovish Signals Ignite Precious Metals Bullish Trend
Fed dovish signals recently released are the core driver of precious metals price increases. On September 27, Fed Chair Powell stated after the FOMC meeting that, considering the pace of inflation decline and economic data, the probability of future rate hikes has significantly decreased, and a rate cut cycle may even start earlier. This statement triggered market expectations of a weaker dollar, and the dollar index's decline directly benefits dollar-denominated precious metals like gold and silver.
Looking at data, U.S. August CPI year-on-year grew 3.2%, below the market expectation of 3.5%, and core CPI year-on-year grew 4.1%, also below expectations. The decline in inflation data reinforced the Fed's dovish stance, and market expectations for rate cuts shifted from late 2024 to Q4 2024. The dollar index thus came under pressure, falling from the recent 105 to 103.5, providing support for precious metals prices.
For the Asia-Pacific market, the impact of the Fed's policy shift is particularly significant. Most Asia-Pacific economies rely on exports, and a weaker dollar helps enhance export competitiveness while reducing import costs and easing inflation pressure. Thus, Asia-Pacific investors' demand for precious metals as a hedge and for allocation rises simultaneously, pushing gold and silver prices higher during Asia-Pacific trading hours.
II. Geopolitical Risks: Rising Tensions in the Strait of Hormuz Intensify Hedging Sentiment
Geopolitical risks are another major driver of the current precious metals market. Recently, tensions in the waters near the Strait of Hormuz have escalated, and diplomatic relations between Iran and Saudi Arabia have fluctuated, sparking market concerns about oil supply disruptions. Rising oil prices have pushed up inflation expectations, and higher inflation expectations typically enhance the hedging value of precious metals.
The Strait of Hormuz is a key channel for global oil transportation, with about 20 million barrels of oil passing through daily, accounting for over 20% of global oil trade. If the situation worsens further, it could lead to oil supply disruptions, thereby pushing up global inflation. For the Asia-Pacific region, as the world's largest oil-importing area, rising inflation pressure will prompt investors to turn to precious metals for hedging.
Additionally, geopolitical risks in the Middle East may also trigger market concerns about the dollar's credibility. As the global reserve currency, the dollar's credibility is based on a stable international order. Intensified geopolitical risks could lead some countries to reduce dollar reserves and increase reserves of precious metals like gold, thus pushing up precious metals prices.
III. Global Central Bank Gold-Buying Boom: Asia-Pacific Central Banks Lead Strategic Allocation
The global central bank gold-buying boom continues, becoming a long-term support factor for the precious metals market. According to the latest data from the World Gold Council, global central bank gold purchases in the first half of 2026 reached 483 tons, a historic high, with Asia-Pacific central banks accounting for over 60% of the purchases. Central banks of Asia-Pacific countries like China, India, and South Korea have increased their gold reserve allocations.
The People's Bank of China has been buying gold continuously since 2022. By August 2026, its gold reserves reached 2200 tons, a 35% increase from the end of 2021. The Reserve Bank of India also announced an increase in gold reserves in March 2026, aiming to raise the proportion of gold reserves in foreign exchange reserves from 7% to 10%. The Bank of Korea, after a 13-year hiatus, resumed gold purchases, planning to add 100 tons of gold reserves in the next two years.
The main reason for Asia-Pacific central banks' gold purchases is strategic demand in a multipolar currency system. As the dollar's dominance weakens, central banks need to increase non-dollar assets like gold as reserves to diversify risks. As the fastest-growing region globally, the gold-purchasing behavior of Asia-Pacific central banks has a demonstration effect on the market, boosting retail investors' demand for gold allocation.
IV. Asia-Pacific Market Supply and Demand: Dual-Drive of Consumption and Investment
The precious metals demand in the Asia-Pacific market shows a dual-drive of consumption and investment. In terms of consumption, gold demand in countries like China and India has continued to recover. In Q2 2026, China's gold consumption grew 12% year-on-year, and India's grew 15% year-on-year, mainly driven by festival demand and investment demand.
In terms of investment, gold ETF inflows in the Asia-Pacific region hit a historic high. In the first half of 2026, net inflows of Asia-Pacific gold ETFs reached 120 tons, a 40% increase from the same period in 2025. Retail investors, allocating gold through gold ETFs, gold bars, and gold coins, have become a significant force in the market.
For silver, industrial demand in the Asia-Pacific region continues to grow. With the rapid development of new energy vehicles and photovoltaic industries, silver's industrial demand has increased significantly. In 2026, Asia-Pacific silver industrial demand grew 8% year-on-year, accounting for 45% of global industrial demand. The growth in industrial demand supports silver price increases and drives adjustments in the gold-silver ratio.
V. Allocation Recommendations: How Asia-Pacific Investors Can Seize Opportunities
For Asia-Pacific investors, current volatility in the precious metals market presents allocation opportunities. First, it is recommended to focus on the long-term allocation value of gold. As a hedging asset, gold still has good value preservation and appreciation functions under Fed dovish signals and geopolitical risks. Second, the growth in silver's industrial demand provides additional support, making it suitable for investors with higher risk tolerance.
In terms of allocation methods, a diversified investment strategy is recommended. For long-term investors, gold ETFs or physical gold can be chosen; for short-term investors, opportunities in gold or silver futures volatility can be focused on. Additionally, it is necessary to closely monitor Fed policies, geopolitical situations, and global central bank gold-purchasing dynamics, and adjust allocation proportions in a timely manner.
On September 29, 2026, the Asia-Pacific precious metals market showed an upward trend with volatility, driven by multiple factors. Fed dovish signals, geopolitical risks, and the global central bank gold-buying boom supported precious metals prices, while consumption and investment demand in the Asia-Pacific market further boosted the market. For investors, now is a good time to allocate to precious metals, requiring strategies tailored to individual needs and market dynamics to seize opportunities in volatility.
