Gold prices are currently in a holding pattern as markets await the Federal Reserve’s rate decision. Analyst Rick Kanda, managing director at The Gold Bullion Company, suggests that the precious metal’s next move will depend on whether policymakers signal a hawkish stance. With markets expecting rates to remain unchanged, investors will be closely watching for any hints about a potential December hike.
Kanda notes that higher interest rates typically make interest-bearing assets more attractive compared to gold, which does not generate income. If the Fed signals a December rate hike, gold prices could face pressure. Conversely, a more dovish outlook could provide support for gold.
Despite potential short-term weakness, Kanda anticipates that gold prices will rebound over the long term, even if the Fed maintains a hawkish stance and the dollar strengthens. He emphasizes that gold’s outlook is heavily influenced by geopolitical uncertainty, central bank demand, and investor confidence. Continued demand for gold as a portfolio diversification tool and a hedge against uncertainty will likely support prices over time.
According to CME FedWatch data, markets overwhelmingly expect the central bank to raise interest rates at its December meeting. Interest rate futures indicate an 83.6% probability of a hike, with a 25-basis-point increase to 4%-4.25% assigning a 77.7% chance. The likelihood of a pause is 16.4%, while traders are not currently pricing in a rate cut.