Gold Price Forecast Hinges on Fed Rate Decision, Policy Outlook

London (Sept 16)  Gold prices snapped a three week winning streak with the precious metal down 1.72% to trade at 1323 ahead of the New York close on Friday. The losses come alongside a rebound in the USD and Treasury yields despite expectation the FOMC will hold rates next week. 

All eyes will be on Janet Yellen & Co next week when the Federal Reserve holds its quarterly interest rate decision on September 20th. Markets will be closely eying the fresh quarterly projections from Fed officials as they pertain to growth, employment and interest rates. In the wake of hurricanes Harvey & Irma, central bank doves may argue to further delay the normalization cycle with the dollar likely to face further headwinds if the committee opts for a shallower path for interest rates.

Gold has been well-supported over the past few months on persistent weakness in the greenback and rising geo-political tensions and that’s not likely to end anytime soon. That said, prices responded to structural resistance this week and although the pullback may have a bit further to go, the broader outlook for bullion remains constructive.

Source: DailyFX