Fed's September Stall Could Keep Gold Prices Neutral

Colin Cieszynski, chief market strategist at SIA Wealth Management, believes that the Federal Reserve will hold off on making any major moves until at least September. This, he says, means gold prices may remain 'stuck in neutral' for three to six months.

The main reason behind this expectation is the uncertainty surrounding price stability and the ongoing conflict in the Middle East, which has created significant risk around any potential gold positions. Cieszynski notes that gold had a massive run-up in value, but the recent sell-down from $5,500 to $4,000 did not completely eliminate all war-related concerns.

He also expects the U.S. dollar to potentially rise if inflation data starts to increase again, which would put downward pressure on gold prices. Cieszynski is neutral on gold for now and does not know what it would take to get it going again. He thinks that the Fed will try to stall through the summer and wait until the September meeting to make any major decisions.

Cieszynski expects a restrained Fed in the near future, as implied by Warsh's task forces still needing time to work on their projects. This would mean no significant moves until at least September, when the central bank can start putting out its forecasts and other data. The upcoming FOMC rate decision is not expected to provide much volatility for gold prices.

Cieszynski thinks that gold prices will likely remain within their recent channel between $3,960 and $4,170 per ounce through this week. He doubts that the Fed meeting will provide a catalyst for a break in either direction unless there are some unexpected surprises.