Gold Tumbles on US Rate Hike Expectations, But Long-Term Rally Remains Intact
Gold prices have taken a hit due to expectations of a US rate hike this month. The Fed's new chairman, Kevin Warsh, and surprisingly strong American jobs data fueled market anticipation of a 0.25 percentage point interest rate increase in September.
The metal closed at $4,439 an ounce on September 8, down from about $4,700 on August 25. It is now $1,200 below its January high of roughly $5,600, which capped an extraordinary rally where the price more than doubled since 2024.
Despite the downward trend, analysts believe gold will resume its long-term rally before the year end. Philip Newman, director of Metals Focus, said 'There's an interplay of factors convincing investors to hold gold despite the rising treasury yield curve and a growing market consensus for an interest rate hike.'