Monthly tactical view for September: Gold, China H Shares, Russ 2000.

For September, we will focus on three markets: Gold (XAU/USD), China H Shares, and US Russ 2000, to take note of in the medium-term horizon (multi-week), according to the latest developments in macro and momentum factors (technical analysis).

The U.S. Federal Reserve has maintained its policy pause throughout 2025, following the December 2024 decision to cut the Fed Funds rate by 100 basis points to a range of 4.25%–4.50%.

Since then, Chair Powell has consistently emphasized a data-dependent, “wait-and-see” approach, reflecting concerns that tariff-related cost pressures could entrench inflationary dynamics.

However, a subtle dovish tilt emerged at the August Jackson Hole Symposium, where Powell highlighted signs of labour market softening as a more pressing risk than tariff-driven inflation, suggesting a recalibration of the Fed’s policy priorities.

The markets have reacted to this shift; the 2-year US Treasury yield, which is sensitive to changes in the Fed’s monetary policy stances, has dropped by 17 bps to 3.62% since Fed Chair Powell’s speech in Jackson Hole on 22 August , a three-month low at the time of writing (see Fig. 1).

Based on a one-month rolling performance as of 1 September, the yield spread premium between the 2-year US Treasury note and an equal-weighted average of 2-year sovereign bonds of Germany, the UK, Japan, Canada, Switzerland, Australia, and China has narrowed by 14 bps to 1.61% over the same period.

Let’s now examine Gold (XAU/USD) on the backdrop of a further potential drop in long-term interest rates.

Gold (XAU/USD), as a non-interest-bearing asset, tends to benefit in lower-rate environments. A decline in interest rates reduces the opportunity cost of holding gold, thereby supporting stronger demand. This dynamic can reinforce bullish momentum, potentially creating a positive feedback loop that drives further price appreciation.

Since Fed Chair Powell’s dovish speech at Jackson Hole on 22 August, the US 10-year Treasury real yield (stripping out 10-year inflation expectations) has dropped by 9 bps to 1.82% at the time of writing. In parallel, Gold (XAU/USD) has rallied by 2.3% and broke above the four-month range resistance of US$3,435 on Friday, 29 August 2025 (see Fig. 2).

Based on a technical analysis perspective, it is likely that Gold (XAU/USD) may have kick-started a fresh medium-term bullish impulsive up move sequence within its major uptrend phase.

In addition, the daily MACD indicator has continued to trend upwards above its centreline after its earlier bullish crossover on Monday, 25 August 2025, which supports a potential change of medium-term trend conditions, from sideways to bullish.

Gold (XAU/USD) medium-term pivotal support stands at US$3,315. A clearance above the intermediate resistance at US$3,500/3,515 (current all-time high area) sees the next resistances coming in at US$3,600 and US$3,716/3,750 (Fibonacci extension and upper boundary of major ascending channel from 14 February 2024 low) (see Fig. 3).

However, failure to hold at the US$3,315 key support invalidates the bullish scenario for another round of choppy corrective decline movements to expose the next medium-term supports at US$3,240 and US$3,177.

We now turn our focus towards the China H Shares CFD Index.

China's “A” shares stock market has been in the limelight recently, where the Shanghai Stock Exchange Composite Index hit a decade high with a monthly gain of 8% in August.

A Fed dovish pivot in September may further strengthen the Chinese yuan against the greenback, where the USD/CNH (offshore yuan) dropped to a fresh 10-month low of 7.1260 on Friday, 29 August 2025, and traded below its 50-day and 200-day moving averages.

Hence, a further potential strengthening of the Chinese yuan may trigger a positive feedback loop back into China “A” shares, in turn, creating a positive spill-over effect into China “H” shares listed on the Hong Kong stock exchange (see Fig. 4).

Watch the 8,700 key medium-term pivotal support on the China “H” Shares CFD Index (a proxy of the Hang Seng China Enterprises Index futures), and a clearance above the 9,225 intermediate resistance may see the next resistances coming in at 9,675 and 10,300 (upper boundary of the major ascending channel from 22 January 2024 low and Fibonacci extension) (see Fig. 5).

On the other hand, a break below 8,700 invalidates the bullish tone for a slide to expose the next medium-term supports at 8,180 (also the 200-day moving average) and 7,745 (the lower boundary of the major ascending channel).

Lastly, our next highlight will be the small-caps US Russ 2000 CFD Index.

Since the bullish reversal seen on the major US stock indices on 7 April 2025 (ex-post US Liberation Day tariffs announcement), the small-caps Russell 2000 has lagged and has not made any fresh all-time high since 5 November 2024.

Interestingly, US small-cap equities have begun to outperform in August, supported by expectations of a potential Fed dovish pivot in September. The Russell 2000 recorded a monthly gain of 7% that surpassed the returns of the S&P 500 (1.9%), Nasdaq 100 (0.8%), and Dow Jones Industrial Average (3.2%).

Given that constituents of the Russell 2000 typically carry higher leverage ratios, a lower interest rate environment would reduce financing costs, thereby improving profit margins and providing a relative performance tailwind for the index.

Key medium-term pivotal support for the US Russ 2000 CFD Index (a proxy of the Russell 2000 futures) stands at 2,267.

A clearance above the current all-time high area of 2,450/2,463 may reinforce a potential extension of the medium-term bullish impulsive up move sequence for the next resistance to come in at 2,538/2,578 (upper boundary of the medium-term ascending channel from 9 April 2025 and Fibonacci extension) (see Fig. 6).

On the flip side, failure to hold at the key support of 2,267 invalidates the bullish scenario for a corrective decline to expose the next medium-term supports at 2,170 (also the 200-day moving average) and 2,070.