Fed Rate Hike Decision Looms Large Over Gold Prices

Gold prices are facing their most-anticipated macroeconomic test of the month as markets prepare for the US Federal Reserve's policy decision on September 15-16. A widely expected 25-basis-point rate hike is not the only concern for bullion investors, but rather what the Fed signals about its next move.

Nirpendra Yadav, Senior Research Analyst at Bonanza Portfolio, believes that much of the expected hike is already reflected in gold prices. Stronger August inflation data, rising oil prices, a firmer US dollar, and higher Treasury yields have weighed on bullion, with spot gold falling to around $4,313 an ounce on September 14.

However, Ross Maxwell, Chief Strategy Officer at VT Markets, estimates that gold has already had time to absorb expectations of tighter monetary policy. If policymakers suggest this is a one-off adjustment rather than the beginning of an extended tightening cycle, gold could prove resilient.