Gold Prices May Not Stay Down If Fed Hikes Rates

A hawkish Federal Reserve is expected to hike interest rates by 25 basis points on Wednesday afternoon, but market strategist Alex Kuptsikevich of FxPro warns that gold prices may not stay down for long.

According to the CME FedWatch Tool, markets see a more than 90% chance of a rate hike, and nearly 80% chance of another increase before the end of the year. Kuptsikevich notes that if the Federal Reserve's projections meet these expectations, gold prices could catch a bid.

However, if the Committee forecasts three rate rises in its updated projections, the US dollar is expected to soar, and gold will face a wave of sell-offs. Kuptsikevich also warns that the risk for the precious metal is that the Federal Reserve could tilt more hawkish than expected.

Kuptsikevich points out that gold's medium- to long-term prospects remain positive, but everything depends on the US dollar. He notes that a rate hike might not necessarily be positive for the dollar, as it could create some geopolitical uncertainty.