Fed Pause Expectations Anchor Gold Prices in Narrow Trading Range

Gold prices have remained steady between $4,200 and $4,500 due to expectations that the Federal Reserve will hold interest rates steady through the remainder of the year. The pause in rate hikes has boosted speculative long positioning, with asset managers heavily building out long gold positions.

TD Securities strategists attribute this trend to softer US inflation and employment data, which have convinced traders that the US Dollar is on a downward path. This has subdued interest rates on the short end of the curve and fueled speculation about the Fed's rate hike intentions.

However, ongoing hostilities in the Persian Gulf keep energy supply lines vulnerable, and an oil price surge could trigger renewed inflation concerns. This would force traders to adjust policy pricing upward, potentially capping near-term upside for gold and keeping it within a $4,200, $4,500/oz corridor into early 2027.

TD Securities projects that once inflation pressure subsides, gold is poised to break out toward higher levels later in 2027.