In theory, global trade should cause prices in different countries to converge: the prices of low-cost producers should gradually increase as wages rise (ie, China's falling prices were a temporary anomaly), while the prices of high-cost producers should fall.
These traders, who may be long in their core gold position, could be looking for a chance to profit on a temporary dip in prices if a debt ceiling agreement is passed.
Several dealers said they had heard the market movements even prompted a large Japanese bank to sell a huge amount of JGBs on Friday, contributing to the temporary drop in prices and spike in yields.