Gold Tests $4,500 An Ounce as Dollar and Interest Rates Weigh on Prices

Gold prices are testing the $4,500-an-ounce area after a sharp rebound in August, but experts warn that a stronger US dollar and renewed monetary tightening could trigger another significant pullback. According to Rick Kanda, Managing Director at The Gold Bullion Company, gold needs to break sustainably above $4,500 an ounce with falling or stabilizing real yields, a weaker US dollar, and strong investment demand.

Kanda believes that the Treasury's expanded long-bond buybacks have helped accelerate a move already supported by concerns around US debt, a weaker dollar, geopolitical uncertainty, and central bank demand. However, he notes that these other factors were already in place before the policy announcement, making it less powerful on its own.

The Federal Reserve is expected to be a significant swing factor for gold through the end of 2026, with Kanda stating that lower interest rates and a weaker dollar would support gold. However, if the Fed is forced into further rate hikes, this could put pressure on gold as yields rise and investors prefer income-producing assets.

Kanda also notes that a US dollar rebound could trigger another major correction in gold, even with elevated geopolitical uncertainty. He sees central bank demand as an important support for prices but not the single biggest driver.