Gold Steady Near $4,400 as Markets Wait on Fed Decision
The gold and silver markets are in a state of high uncertainty as traders wait for the Federal Reserve's decision on interest rates. Gold prices are steady near $4,400 per ounce, while silver holds above $66 per ounce. The setup is complex, with multiple crosscurrents affecting bullion, including inflation data, war in the Middle East, and structural central-bank buying trends.
The Fed's decision on September 15-16 is a major driver of the markets, with traders pricing in a 60-65% probability of a 25-basis-point rate hike. This would raise the opportunity cost of holding non-yielding bullion, making gold and silver less attractive to investors.
A softer dollar is cushioning the blow for gold, but the safe-haven channel is being pulled in opposite directions by the rate-hike channel. Higher oil prices are feeding directly into CPI, strengthening the case for a Fed rate hike, which would lift real yields and the dollar, putting pressure on gold and silver.
Despite short-term trading dominated by Fed bets, the structural backdrop for gold continues to strengthen. China's central bank has added 650,000 troy ounces of gold to its reserves in August, its largest monthly purchase since October 2023, marking its 22nd consecutive month of buying.