Gold at $4,400 as US Deficit Swells, China Tightens Offshore Rules

The U.S. federal deficit hit $1.8 trillion in the first 10 months of fiscal 2026, already exceeding the full-year 2025 shortfall with two months left. That number, combined with a weaker dollar and fading expectations for further Fed rate increases, has pushed gold above $4,400 an ounce and silver past $66.

Markets now price a September Fed hike at just 33%, down from 51% a month earlier. Traders see the rate path flattening as fiscal stress grows, a setup that historically favors precious metals.

“This is no longer a story driven by one catalyst,” said Lars Hansen, head of research at The Gold & Silver Club. “Fiscal stress, monetary uncertainty, central-bank buying, Chinese demand and structural commodity scarcity are beginning to reinforce each other. That is when markets can reprice very quickly.”

China added a new dimension last week. Beijing widened its crackdown on offshore wealth, introducing a 20% levy on gains from certain offshore trust transfers and pursuing undeclared overseas income more aggressively. For wealthy Chinese citizens, that tightens options for storing wealth abroad.

Capital is moving into gold instead. Chinese gold-backed ETFs have recorded 14 consecutive days of inflows this month, the longest streak since March, drawing more than $1.2 billion. The People’s Bank of China added 20 tonnes of gold in July, bringing reported reserves to a record 2,366 tonnes and extending its buying streak to 21 months.

“Private investors are buying. The central bank is buying. And Beijing is simultaneously tightening its grip on offshore wealth,” Hansen said. “That combination deserves considerably more attention than it is currently receiving.”