Gold Faces Crucial Test as Fed Rate Outlook and Oil Turbulence Pressure Prices
After a strong August rally, gold is slipping in early September as higher US payrolls revive rate-hike expectations and oil-driven inflation concerns rise.
August saw gold climb more than 10% to near $4,450 per ounce, helped by an expanded US Treasury long-bond buyback, easing inflation fears from lower crude, and strong inflows into gold-backed ETFs. September has reversed those supports: Fed Governor Christopher Waller signaled a willingness to keep rates steady only if disinflation continues, while a surprisingly strong August payroll report of 162,000 boosted the dollar and Treasury yields.
The dollar’s later dip to around 98.6 per euro and a firmer yen, driven by hawkish Bank of Japan officials, have offered limited relief. Real yields, measured by the 10-year TIPS at 2.4%, have risen, and markets now assign roughly a 60% chance of a 25-basis-point Fed hike on September 16, up from a hold-majority stance in August. A hot CPI could push gold toward the $4,280-$4,300 support zone, while a benign reading might reopen the path to $4,500. Despite short-term volatility, central-bank buying—highlighted by the People’s Bank of China’s 22-month streak—and record ETF inflows provide a structural floor for the metal.
