Gold Rises as Institutional Buyers Bet Against Hawkish Fed Expectations

Despite hawkish Federal Reserve expectations, institutional gold buying has accelerated, signaling confidence beyond short-term rate risk. Spot gold rose 0.3% to $4,040.63 per ounce by 0656 GMT as CME FedWatch showed a 68% probability of a Fed hold and a 32% probability of a 25 basis point hike at the 1800 GMT decision.

COMEX gold net longs climbed 16% month over month to 538 tonnes in June, the highest level since January, as large non-managed-money traders added positions while retail-proxy traders reduced exposure. North American gold ETFs recorded $7.7 billion of first-half outflows, but Asian funds attracted a record $12.4 billion led by India's $3.9 billion.

Commerzbank is targeting $4,500 per troy ounce for gold and $67 per troy ounce for silver by year end, assuming the Fed holds rates. A Fed hold followed by softer guidance from Chair Kevin Warsh at 1830 GMT could trigger a rebound in gold prices, according to OANDA senior analyst Kelvin Wong.