Gold Prices Rebound as Fed Speculation Continues
The gold market has been experiencing extreme volatility due to conflicting signals from the Federal Reserve. After plummeting by 2.86% on September 1, following Fed Chair Kevin Warsh's comments on inflation, gold prices rebounded by around 2% on Thursday to reach $4,463 per ounce. The price action was largely driven by speculation about interest rates, with market pricing for a September rate hike jumping from 40% to 66% in just one week.
However, the latest ADP employment report showed only 38,000 private-sector jobs added in August, well short of economist forecasts. This weak reading has revived expectations that the Fed may cut rates rather than raise them, which has put downward pressure on the dollar and Treasury yields, giving gold fresh momentum.
Despite the whipsaw price action, institutional conviction remains unshaken. SPDR Gold Shares, the world's largest gold-backed ETF, reported holdings of 1,056.62 tonnes as of September 2, an increase of 11.13 tonnes week-over-week and the seventh consecutive week of inflows.
The structural bid from official buyers continues to underpin some bullish forecasts. Goldman Sachs Research projects gold reaching $4,900 per ounce by the end of 2026, citing sustained central bank demand and potential growth in derivatives activity. RBC Capital Markets is even more aggressive, calling for a year-end peak of $4,929, with $5,296 on the table for 2027.