Fed Pause Sustains Gold Prices as Systematic Demand Remains Supported

The Federal Reserve's decision to hold interest rates steady has supported gold prices by reducing the opportunity cost of holding non-yielding assets like gold, according to TD Securities.

The firm notes that systematic funds, which follow algorithmic trading signals, have maintained a net long position in gold due to the supportive macro backdrop.

The pause in rate hikes has reduced the bar for further tightening and kept real yields in check, a key driver for gold. As of mid-2025, the Fed funds rate remains between 5.25% and 5.50%, with market expectations leaning towards a cut later this year.