Gold maintains its stability while investors anticipate the Fed's interest rate announcement
In a week marked by economic uncertainty, gold prices have seen a mixed performance. US inflation data for August came in slightly above expectation, yet bullion climbed about 1.6% last week, indicating a strong start to the week.
Non-yielding bullion tends to perform well in low-interest-rate environments, making it a popular choice for investors expecting a rate cut by the Federal Reserve this week. However, US gold futures for December delivery were down 0.1%, reflecting a more cautious sentiment as the week progressed.
Tim Waterer, KCM Trade chief market analyst, expects a period of consolidation or a minor pullback for gold. He believes this potential consolidation supports gold's ambitions for hitting loftier price targets.
The upcoming Federal Reserve meeting, scheduled for September 17-18, 2025, is facing challenges. A legal dispute over its leadership and President Donald Trump's efforts to exert more control over the interest rate policy and the central bank's broader role have added complexity to the proceedings.
Spot silver was up 0.3% at $42.29/oz, while platinum gained 0.9% to $1,403.77. Palladium rose 0.2% to $1,199.35, suggesting a broader trend of precious metals remaining resilient amidst economic uncertainty.
Gold prices were little changed on Monday, with spot gold up 0.1% at $3,644.98/oz. The dollar index edged 0.1% higher, potentially impacting the value of gold priced in US dollars.
There is a risk, according to Waterer, that the Fed may not be clear-cut in signaling when further rate cuts could arrive. This ambiguity could lead to tactical pullbacks in the gold market, as warned by Goldman Sachs. They see the risks to their $4,000/oz mid-2026 forecast for gold as skewed to the upside, but caution of the risk of tactical pullbacks due to rising speculative length.
In the meantime, speculators reduced their net long positions by 2,445 contracts in the week ended September 9, suggesting a more cautious approach in the gold market. The next interest rate decision announcement will be made on September 17 at 8:00 PM German time (2:00 PM Eastern Time), followed by Fed Chair Jerome Powell's press conference at 8:30 PM German time. The outcome of these events will undoubtedly shape the trajectory of gold prices in the near future.
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