Gold prices are holding steady above $4,000 an ounce after the Federal Reserve maintained interest rates on Wednesday but emphasized its commitment to reducing inflation to 2%. Bart Melek, Head of Commodity Strategy at TD Securities, expects gold to remain within a tight range of $3,900 to $4,250 through the end of the year, with no signs of a major downturn.
Melek noted that while the Fed’s decision was hawkish, it was less aggressive than anticipated. Federal Reserve Chair Kevin Warsh explained that the pause in rate hikes would allow the committee to gather more data before making further adjustments. Warsh highlighted that financial conditions have tightened for some businesses and households, aligning with the Fed’s goals of sustainable economic growth and price stability.
Despite the pause, Melek believes the Fed will continue raising rates modestly, as long-term yields remain elevated. This could increase the opportunity cost of holding gold, making a significant price rebound unlikely in the near term. Silver is also expected to stay within a narrow range of $50 to $55.
Looking ahead, Melek remains cautiously optimistic about gold’s long-term prospects. Once inflation nears the 2% target, he anticipates the Fed will shift focus to its employment mandate, potentially pushing gold prices back toward recent highs.