Gold Prices Decline

Gold Prices Slip as Stronger US Dollar and Higher Rate Expectations Weigh

Gold prices declined on Wednesday as a stronger US dollar and expectations of prolonged higher interest rates continued to pressure the precious metal. Investors remained focused on inflation risks and the possibility of additional monetary tightening by the Federal Reserve.

At 16:53 GMT, spot gold fell 0.9% to $4,318.05 per ounce, while gold futures eased 0.5% to $4,354.90 per ounce.

Meanwhile, the US Dollar Index (DXY), which measures the greenback against a basket of major currencies, rose 0.1% to 100.71, reaching its highest level since July 30. A stronger dollar typically makes gold more expensive for holders of other currencies, reducing international demand.

“US dollar has become the preferred safe-haven asset for investors during periods of uncertainty,” said David Morrison, Senior Market Analyst at Trade Nation, in a market note.

The greenback also found support from expectations that the Federal Reserve may maintain a restrictive monetary policy stance to combat persistent inflationary pressures, particularly those linked to elevated energy costs. Although crude oil prices have retreated below $100 per barrel amid easing concerns over Middle East supply disruptions and renewed diplomatic efforts, oil remains more than 60% higher than at the start of the year.

Last week, the Federal Reserve raised its benchmark interest rate by 25 basis points. Fed Chair Kevin Warsh signaled that further rate increases could be necessary in the coming months if inflation remains elevated. Additional comments from St. Louis Fed President Alberto Musalem and Chicago Fed President Austan Goolsbee also pointed to the possibility of more policy tightening to bring inflation under control.

Analysts at ANZ noted that gold has been trading within a relatively narrow range as investors balance the prospect of further rate hikes against growing investment demand for the precious metal.

According to ANZ, China’s gold imports reached approximately 1,000 metric tons during the first eight months of 2026. Chinese gold-backed exchange-traded funds (ETFs) added around 44 tons in August, while the People’s Bank of China accelerated its purchases, acquiring roughly 20 tons during the same month.

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Gold Prices Rise

 

Gold Prices Rise as Oil Slump Eases Inflation Concerns, Trump Signals Iran Talks

Gold prices edged higher on Tuesday after crude oil prices fell more than 9% over the previous four trading sessions, easing inflation concerns and reducing expectations for further aggressive interest rate hikes by the Federal Reserve.

A weaker U.S. dollar and renewed optimism surrounding potential diplomatic engagement between the United States and Iran also supported bullion prices, although Federal Reserve officials remain divided over the future path of monetary policy.

As of 09:04 WIB, spot gold (XAU/USD) climbed 0.4% to $4,359.40 per ounce, while Gold Futures gained 0.3% to $4,396.85 per ounce. Silver (XAG/USD) advanced 0.6% to $66.43 per ounce, and platinum (XPT/USD) rose 0.3% to $1,809.03 per ounce. Meanwhile, the U.S. Dollar Index slipped 0.03% to 100.39.

Oil Price Decline Reduces Inflation Pressure

Gold rebounded from Monday’s losses after posting its largest daily decline in a week. The recovery came as oil prices stabilized following a sharp four-session selloff of more than 9%, helping to ease inflationary pressures that had recently weighed on financial markets.

Lower energy prices have also tempered expectations that the Federal Reserve will need to tighten monetary policy further. Gold typically benefits from lower interest rate expectations because the precious metal does not generate yield.

Market sentiment was further supported by renewed diplomatic developments involving the United States and Iran. U.S. President Donald Trump is scheduled to address the United Nations General Assembly in New York on Tuesday and has signaled openness to meeting Iranian President Masoud Pezeshkian on the sidelines of the event.

The renewed diplomatic focus follows months of geopolitical tensions and disruptions to energy supplies in the Middle East. Any improvement in oil supply prospects could further alleviate inflation concerns and support investor sentiment.

Fed Officials Send Mixed Interest Rate Signals

Investors are also closely monitoring comments from Federal Reserve officials after the central bank unanimously approved a 25-basis-point interest rate increase last week, marking its first rate hike in three years.

Chicago Federal Reserve President Austan Goolsbee stated that policymakers cannot simply ignore recurring and persistent supply shocks, emphasizing the need for a response even if it results in economic challenges.

Meanwhile, St. Louis Federal Reserve President Alberto Musalem said additional rate hikes may still be necessary to bring inflation back to the Fed’s target level, which has remained unmet for more than five years.

Gold prices came under pressure on Monday as markets priced in the possibility of further Fed tightening later this year, while hawkish signals from other major central banks helped strengthen the U.S. dollar.

Despite near-term headwinds, investment demand for gold remains robust. Approximately 50 metric tons of gold flowed into physically backed gold exchange-traded funds (ETFs) during September, putting the sector on track to record a third consecutive month of inflows and highlighting continued investor interest in the precious metal.

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Goldman Gold Outlook

What Does the Fed's Rate Hike Mean for Gold Prices in 2027? Goldman Sachs Explains

Goldman Sachs has maintained its bullish outlook on gold, telling investors in a note on Friday that the Federal Reserve’s recent interest rate hike should slow, rather than derail, the precious metal’s long-term rally.

The bank’s analyst, Lina Thomas, reiterated Goldman’s forecast for gold prices to reach $5,400 per troy ounce by the end of 2027, despite the Fed’s rate increase this week and growing expectations among economists for another hike in October.

While higher interest rates are expected to continue weighing on gold through exchange-traded fund (ETF) demand in the near term, Thomas said the Fed is still likely to deliver three rate cuts between September 2027 and March 2028, leaving the terminal interest rate outlook unchanged.

As a result, Goldman believes tighter monetary policy will primarily affect the pace of gold’s appreciation rather than its long-term destination.

“We expect tighter monetary policy to be reflected more through a slower pace of near-term appreciation rather than a lower terminal gold price,” Thomas said.

Goldman lowered its year-end fair value estimate for gold to $4,650 per ounce from $4,900 per ounce, although the revised target remains above the current spot price of around $4,350 per ounce. The bank noted that much of the impact from tighter monetary policy has already been priced into ETF demand.

Thomas added that Goldman continues to expect gold to “grind higher in the near term,” with stronger-than-expected central bank purchases helping offset the remaining pressure from elevated interest rates.

Central bank buying remains the key structural driver behind Goldman’s bullish gold outlook. The bank estimates that official-sector purchases account for nearly all of the projected 23% increase in gold prices through the end of 2027. Current purchases are running at approximately 91 metric tons per month, significantly above the pre-2022 average of 17 tons per month.

According to Thomas, risks remain skewed to the upside, supported by resilient demand for gold call options as a hedge against macroeconomic policy uncertainty. However, she also cautioned that price volatility could increase in both directions.

“On the other hand, a much more hawkish Fed path could trigger a sharper-than-usual correction,” Thomas warned.

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