Gold Holds Ground as Fed Rate Hike Looms

The Federal Reserve's decision to raise interest rates this week is expected by nearly 90% of the market, but gold prices are holding steady above $4,300 per ounce.

This resilience suggests that a single rate increase may not have as significant an impact on gold as previously thought. In fact, many institutions believe that the Federal Reserve's policy flexibility is being constrained by rising U.S. government debt, which now surpasses $40 trillion.

Central banks around the world are also set to make important decisions this week, including the Bank of England and the Bank of Japan. According to Chris Zaccarelli, Chief Investment Officer at Northstar Asset Management, 'the Federal Reserve is not necessarily set to raise rates this week, but it's hard to find a compelling reason to keep them unchanged.'

Naeem Aslam, Chief Market Strategist at Zabe Capital, believes that the Federal Reserve's credibility is under scrutiny, providing strong support for gold. He notes that if the Fed raises rates, U.S. Treasury yields will still fall short of market expectations, while if it opts to hold steady, its policy credibility will come into question.