HUNGARY: For Min-EU Sanctions 'Failure'; Trump-Putin Summit Prep 'In Full Swing'

Gold pulls back after registering a fresh all-time high above $3,700/oz on Tuesday, spot last $3,665/oz.

• The bullish technical trend remains intact, with initial support located at the September 11 low ($3,614.0/oz).
• The move feels like a reduction of exposure ahead of this evening’s FOMC decision (our full preview of that event can be found here), with the bid away from Asia-Pac lows in the broader USD providing some modest headwinds.
• Central bank demand, a softer greenback and increased worry surrounding Fed independence have provided the bulk of the tailwinds for the yellow metal in recent months.
• Deutsche Bank believe that “the FX and rates environment remain conducive to further upside, while positioning indicators are not stretched. Although gold has screened as rich versus fair value, we think much of this is due to the strength of official demand, which we expect to persist.” As a result, they have raised their gold forecast for ’26 to an average of $4,000/oz from $3,700/oz previously.

• Headline 2.04% (2.05% flash, 2.04% prior)
• FAT 3.19% (3.21% flash, 3.25% prior)
• NEIG 0.78% (0.78% flash, 0.75% prior)
• Energy -1.97% (-1.89% flash, -2.39% prior)
• Services 3.10% (3.10% flash, 3.15% prior)
• Core 2.27% (2.27% flash, 2.31% prior)

The Presidential Election Management Committee of the governing conservative Liberal Democratic Party (LDP) met earlier on 17 Sep to sign off on plans for a truncated election hustings campaign. With the LDP leadership election to be formally called on 22 Sep, and held 12 days later on 4 Oct, the Committee has decided that candidates will speak at just three regional events in the Tokyo, Aichi, and Osaka prefectures on 24 Sep, 26 Sep, and 2 Oct respectively. In the 2024 LDP leadership contest eight in-person events were held. 

• Political betting markets show Agriculture Minister Shinjiro Koizumi as favourite to take over from outgoing PM Shigeru Ishiba. Polymarket data shows Koizumi with a 60% implied probability of victory, compared to 34% for former Economic Security Minister Sanae Takaichi. Former Chief Cabinet Secretary Yoshimasa Hayashi trails in a distant third place with 5.3%.
• One of the key issues for LDP members and lawmakers in the election is which candidate can win back conservative voters who have deserted the LDP in favour of the right-wing Sanseito party.
• Koizumi, viewed as more liberal than Takaichi, may have seen his chances improved by endorsement of Finance Minister Katsunobu Kato. Kato was a close ally of the late PM Shinzo Abe, and the prominent conservative becoming Koizumi's campaign chief could win round support from those wavering following Koizumi's poor debate performances in the 2024 contest, which scuppered his campaign.

Chart 1. Political Betting Market Implied Probability of becoming next Japanese PM, %

Source: Polymarket