Article details
Gold prices experienced a muted reaction despite a sharp decline in the probability of a Federal Reserve interest rate hike in October, which fell to just 17.7%. The yellow metal failed to stage a significant rally because financial markets continue to discount higher-for-longer interest rates. Market expectations still reflect an 82.7% chance of at least one rate increase by December, while long-term forecasts position the rate plateau near 4.7% by late 2027, well above the central bank's median projections.
This hawkish interest rate backdrop maintains upward pressure on Treasury yields, limiting the non-yielding metal's upside potential. Investors are now shifting their full attention to the upcoming FOMC meeting minutes for clearer guidance on the central bank's internal debate regarding inflation and future policy moves. The minutes will likely serve as a crucial catalyst in determining whether gold can maintain its key support levels or face renewed selling pressure.
Moving forward, traders should closely monitor US economic data releases and Federal Reserve commentary. Until the market adjusts its expectations for long-term terminal rates downward, gold will likely struggle to sustain a prolonged bullish trend, remaining sensitive to shift in Fed expectations.
