Hua Seng Heng Gold Futures assesses that the outcome of the US Federal Reserve meeting and the release of the Dot Plot will be the decisive factor in whether gold prices swing sharply up or down. In August, gold prices rose for a second consecutive month, returning 10% and closing at 4,447 dollars, and hit a more than three-month high near 4,700 dollars, up as much as 16%, before profit-taking emerged after Fed Chair Kevin Warsh stated at the annual Fed conference in Jackson Hole that he is committed to bringing inflation down to the 2% target, opening the door to interest rate hikes. This led the market to shift its view back to expecting the Fed to raise rates a total of two times this year, from previously expecting only one hike at the December meeting. Hua Seng Heng expects the Fed to raise rates by 0.25% at this September meeting. In the case that the Fed leaves the Dot Plot unchanged, standing by June's projection, gold prices are expected to rise sharply. In the case that the Fed projects two rate hikes this year and rate cuts next year, gold tends to rise. But if the Fed projects two rate hikes this year and holds rates steady next year, gold tends to fall on concerns over Higher for Longer. On the technical side, gold prices are in a correction phase after breaking below the 200-day SMA on August 28, with a short-term range estimated at 4,300 to 4,540 dollars, support at 4,300 dollars, and key resistance at 4,540 dollars.
Article expects the Fed to raise rates 0.25% in September and markets now price two hikes this year, pushing the policy rate yield higher.
Expectations of Fed rate hikes and a 'Higher for Longer' path lift Treasury yields, pushing the 10Y yield up.
