Wall Street turns bullish on gold price ahead of the Fed, Main Street clings to slim bullish majority despite weekly slide
(Kitco News) – Gold prices saw another volatile week of trading, with early attempts to stabilize above $4,400 per ounce eventually overwhelmed by surging oil prices, higher Treasury yields, and rising expectations that the Federal Reserve will raise interest rates at next week’s policy meeting.Spot gold kicked off the week trading at $4,422.50 per ounce on Sunday evening, and the yellow metal initially tried to build on the prior week’s late recovery as traders monitored the U.S.-Iran conflict, the Strait of Hormuz, and renewed inflation risks from higher energy prices. The metal pushed higher into Tuesday, when spot prices set their weekly high at $4,442.98 per ounce, but the rally quickly faded as the dollar firmed and rate-hike expectations continued to build.Selling pressure accelerated Wednesday and Thursday after PPI showed U.S. producer prices rose in August, reinforcing concerns that energy costs and supply disruptions were feeding back into inflation. Gold broke below $4,350 as Treasury yields climbed and traders priced in a growing chance that the Fed would tighten policy again at its Sept. 15-16 meeting.The metal then rebounded Friday after August CPI kept inflation pressure alive but did not trigger a fresh panic, helping dip-buyers step in near the lower end of the week’s range. Still, the recovery remained capped as core inflation kept the Fed-hike trade firmly in play, with futures markets pricing the odds of a September rate increase sharply higher after the data.After falling to its weekly low at $4,292.11 per ounce on Friday, spot gold recovered part of the previous days’ losses but failed to reclaim the $4,400 level, leaving the metal lower on the weekly chart heading into the weekend.The latest Kitco News Weekly Gold Survey showed Wall Street returning to its bullish bias after gold’s late-week rebound, while Main Street further pared back its bullish majority following another weekly decline.“Gold may trade higher into the FOMC meeting,” said Marc Chandler, managing director at Bannockburn Global Forex. “The $4460-$4510 area may be a reasonable technical objective. However, the outcome of the Fed meeting is the key. The Fed funds futures are discounting almost 90% chance of a hike, but economists surveyed by Bloomberg (Sept 4-9) are less sanguine. Only 13 of 48 expect a hike.”“The failure to hike could see gold rally,” Chandler added. “A move above the $4540 area lifts the technical tone.”“Lower,” said Adam Button, head of currency strategy at investingLive. “The Fed will hike, and that puts a downward bias into gold but if the statement and press conference isn’t sufficiently hawkish, then gold could quickly rebound.”“Up,” said Darin Newsom, senior market analyst at Barchart.com. “At this point Friday morning, the Dec futures contract has held its previous low daily close of $4,396.40 from September 1. This sets the stage for Dec26 to build bullish momentum, enough to take out its previous high daily close of $4,539.90 from September 3. Additionally, the 45-day moving average continues to increase, something algos are likely keeping an eye on. Dec26 has not closed below its 45-day since August 4.”“What do the August PPI and CPI numbers mean for gold? Nothing, as far as I’m concerned,” Newsom said. “The Fed fund rate should go up, possibly twice yet this year – October and December? – but I don’t think it will strengthen the US dollar as it would be expected to because the rest of the world continues to sell the US. For obvious reasons. Meanwhile, central banks continue to buy gold. Also for obvious reasons.”“Unchanged for now,” said Adrian Day, president of Adrian Day Asset Management. “Gold moving up in the face of higher US consumer inflation, strengthening the case for an interest rate increase next week, as well as higher Treasury yields, is a strong sign of underlying strength. The volatility in the Iran conflict means a reversal, in oil and the dollar, is always possible, and that would be negative for gold. But the strength in the face of headwinds indicates that gold is slowly forming a higher base, at the $4,300 level, before moving higher again.”“Up,” said Rich Checkan, president and COO of Asset Strategies International. “Inflation came in as a mixed bag… PPI down slightly and CPI up slightly. So much for Fed independence. Chairman Warsh has enough wiggle room to not hike interest rates before the midterm elections. Gold will surge slightly as a result.”Bob Haberkorn, senior commodities broker at StoneX Group, told Kitco News that precious metals prices can’t really go much lower, because rates probably can’t go substantially higher.“The sell-off yesterday was so dramatic, already pricing in a hot [CPI] number here, that it was a muted response,” he said. “We’re off a little bit, stocks are up, but oil is down, and that’s helping the metals.”“I’ve been seeing some bargain hunting coming into this market in gold and silver at the moment, but it’s small,” he said. “I think a lot of people are on the sidelines; they want to get past the Fed on the 16th before doing much else. Also, a lot of people that are long-term bulls seem to be looking for hedges with concern going into next week.”“Yesterday’s sell-off was such a big move, I don’t think there were enough sellers left to react to that CPI number,” he said. “I think between now and the 16th it’s going to be a little quiet in metals.”Haberkorn said the market is starting to sniff out the ceiling on the Fed rate.“I don’t think they can raise rates that much considering the situation that the Fed is in, the debt levels that are out there, and also the economic ramifications of higher rates,” he said. “I think they might just have to deal with higher inflation and see how it goes – this Iran war could wrap up – and leave rates be.”“If they don’t raise rates at the meeting on the 16th, we will see metals trade substantially higher into the end of the year,” Haberkorn said. “I could see a situation similar to what we saw last year. I’m pretty bullish.”“I think gold will gradually work itself up to the target of $5,000 if they don’t raise rates,” he added. “$5,000 is a big number here that I think it wants to get back to, and a lot of bullish people are expecting it to get back to those levels if they don’t do a hike.”Asked what the market’s sky-high expectations of a rate hike actually mean in this environment, Haberkorn said it’s what the data and the market situation imply the Fed should do, but not necessarily what the Fed will do.“It’s taking into account the data, the numbers, and what Treasury yields are doing at the moment,” he said. “It’s taking into account the reality of the situation and what the Fed should do given the circumstances.”If the market is solidly priced in for a hike and the Fed holds, Haberkorn said the market will address this gap through Treasuries.“If they don’t hike, I think the market will force yields higher through these bond auctions,” he said. “We’re seeing it right now. And the way [the administration] will combat that – and this is very bullish for gold – they won’t call it that, but it will be yield control. [Bessent] kind of let the market down with $5 billion this week, $5.1 billion is what they bought back, so I think you’re going to see more of that.”If the Fed’s actions do align with market sentiment and they end up delivering a 25-basis-point rate hike, Haberkorn expects a pullback in metals, but only a shallow one.“If they do hike and they do a quarter, I think we will see metals pull back, but I don’t think the pullback is going to be as bad as it normally would,” he said. “I just see a limit to what they can do with rate hikes.”This week, 14 analysts participated in the Kitco News Gold Survey, with Wall Street sentiment leaning bullish once again despite gold’s weekly decline. Nine experts, or 64%, expected to see gold prices gain ground during the week ahead, while only two, representing 14%, saw the yellow metal falling further. The remaining three analysts, 21% of the total, expected the yellow metal to move in a volatile sideways channel.Meanwhile, 218 votes were cast in Kitco’s online poll, with Main Street investors maintaining their mulish majority by the narrowest of margins. 115 retail traders, or 53%, looked for gold prices to rise next week, while 52 others, or 24%, predicted the yellow metal would lose ground. The remaining 51 investors, representing 23% of the total, expected to see consolidation during the week ahead.Next week sees central banks return to the fore, and while the Federal Reserve’s interest rate decision tops the list, England and Japan will also deliver their monetary policy decisions over a compressed two-day economic news calendar.On Wednesday morning, traders will be watching for the U.S. Retail Sales report for August, before all eyes turn to the Federal Reserve’s monetary policy decision at 2 pm ET, with markets firmly priced in for a 25-basis-point hike.Then early Thursday morning, the Bank of England will announce its monetary policy decision, followed by weekly jobless claims and the Philly Fed manufacturing survey, then housing starts and building permits and pending home sales for August.The week’s final economic news event of note will be the Bank of Japan’s monetary policy decision overnight.Jesse Colombo, independent precious metals analyst and founder of the BubbleBubble Report, was looking at the technicals in light of Friday’s price action.“I think investors were overly bearish this past week,” he said. “They were bracing for a very hot CPI number, and I think they went overboard with selling gold. It came in a little hotter than expected – not as hot as it could be – but I think investors were too pessimistic going into the CPI report. Not that I blame them, of course, because you just don’t know how it’s going to play out. But there was an excessive amount of pessimism, and gold immediately had a sigh of relief. Then what happened was it became overbought pretty quickly, and oftentimes when that happens, it’ll take a breather, which is what we saw in the ensuing few hours.”Columbo pointed out that spot gold bumped up against the $4,400 per ounce resistance level when it rallied post-CPI.“$4,400 has played such a key role over the past year, a key support earlier this year, from February and late March,” he said. “Then it finally broke through in June, but that was a major support and resistance level the whole year, and it still continues to be very psychologically important. There was also a false breakdown on the daily chart where it briefly broke below $4,300, but it didn’t stay below there. That’s a good sign.”Asked how he would be positioning himself in gold ahead of next week’s Fed decision, Columbo said he’d advise caution, but he’s optimistic about gold’s prospects coming out of the meeting.“In general, I don’t like to place bets ahead of major binary events like this,” he said. “I don’t believe I have an edge in that regard. But I suspect that there’s going to be a ‘buy the news’ rally, a relief rally,” he said. “Especially after today’s CPI, these rate hike expectations will not come as a surprise to the market – this has already been well telegraphed going on for months – so a big part of me just believes that we should rip the Band-Aid off and get it behind us. There’s so much speculation about, ‘is there going to be a rate hike or not?’”“Maybe just hike. You can always lower it,” he said. “It looks like the Fed is behind the curve and should raise 25 to 50 basis points.”Coming out of the FOMC, Columbo said he expects gold to rally a little if the Fed hikes, and a lot more if it holds.“Also, as a final confirmation, I do want to see a solid close above $4,400,” he said. “That would be in conjunction with a relief rally from the Fed, or maybe them not even hiking, but I want to see it close above $4,400. If so, I think we’re going to head up to $5,000 in the next few months. I would like to see a daily close at a minimum, with very strong volume on futures and also ideally in ETFs and mining stocks. You want to see volume come in because it shows institutions are backing the move.”“If so, I think we’re going to surpass the highs that we had in late August and keep heading on up to $5,000 as the next target.”Alex Kuptsikevich, senior market analyst at FxPro, expects gold prices to rise higher next week.“Rising government bond yields in major economies continued to draw capital away from precious metals,” he said. “However, in the gold market, as in the previous week, prices fell towards $4,300, shifting the balance of power in favour of buyers. This marked the third consecutive week of decline, with prices falling below the 50-week moving average. Nevertheless, we note a trend of buying on dips, which contradicts the bearish scenario of a downturn in such cases over the past fifteen years. In my view, last week saw a false breakout, as gold did not lose its support, unlike in similar episodes.”“If the world is indeed becoming increasingly concerned about rising government expenditure on servicing the debt burden, investors will seek refuge in assets insulated from such risks,” Kuptsikevich said. “For now, central banks are following the market, raising key interest rates in response to rising bond yields. But the moment this is followed by increased volatility and risks to the economy, central banks will switch to rate management, keeping long-term yields in check, as has happened on numerous occasions since 2007. This creates a favourable environment for commodities, particularly gold.”Michael Moor, founder of Moor Analytics, expects to see gold prices post gains next week.“In a Higher time frame: I cautioned on 8/16/18 the break above $1,183.0 warned of renewed strength. We have seen $4,443.1,” he wrote. “These are ON HOLD. We held exhaustion with a 56268 high and rolled over $1,651.1. This is ON HOLD. On a medium timeframe basis: The trade below 52554 projected this down $740 (+)—we attained $1,300.0. The trade below 52036 brought in $1,248.2 of pressure. The trade below 51606 brought in $1,205.2 of pressure. These are ON HOLD. We held exhaustion with a 49177 high after a pullback and rolled over $962.3. The break below 48185 projected this down $185 (+)—we attained $863.1. The trade below 47923 projected this down $205 (+)—we attained $836.9. These are OFF HOLD. We held macro exhaustion with a 39554 low and bounced $799.6—if we continue in a bona fide bullish correction, the minimum target is 49636. This is ON HOLD.”“On a lower timeframe basis: We held exhaustion with a 40190 low and bounced $736.0,” Moor said. “The trade above 41192 brought in $635.8. On 8/4 we left a bullish reversal—we have rallied $632.6 from the 41224. The break above 41389 projected this up 345.00 (+)—we attained $616.1. On 8/5 we left a major bullish reversal—we rallied $449.8 from 43052. These are ON HOLD. The break below 46369 brought in $307.7 of pressure. The break below 45886 (+10.8 tics per/hour) projected this down $205 (+)—we attained $259.4. These are OFF HOLD. The trade below 44227 (+5.5 tics per/hour) projects this down $65 minimum, $500 (+) maximum—we have attained $89.7 so far—however, we are also approaching to possible final exhaustion levels if in a correction, at 42954-655 and 41875-1327—and have entered into the ideal timeframe for one to hold more than temporarily. Decent trade back above 44383 (+5.5 tics per/hour starting at 11:20am) will warn of decent strength, likely for days.”At the time of writing, spot gold last traded at $4,349.42 per ounce for a loss of 1.65% on the week but a gain of 0.75% on the day.See live precious metals prices for gold, silver, platinum and palladium — in USD, CAD and 12 more currencies.
The next trillion matters more for gold than the next Fed rate hike
(Kitco News) – Something incredible happened this week, and even if you weren’t paying attention, the gold market certainly was.The threat of a 25-basis-point hike next week continues to put pressure on gold, which makes sense, as rising interest rates push bond yields higher, raising the opportunity cost of holding non-yielding assets.However, in the grand scheme of things, the U.S. economy has much bigger problems than the direction of short-term interest rates. The U.S. government is starting to lose control of the bond market.This past week, the U.S. Treasury Department bought $5.1 billion in long-dated U.S. bonds, but instead of bringing down the long end of the curve, yields pushed higher. The 10-year yield ended the week at 4.97%, a three-year high. Many analysts expect it is only a matter of time before yields hit 5%, creating another major hurdle for the economy.Everyone is focused on the Federal Reserve’s monetary policy decision, but they need to pay more attention to America’s massive spending problem. Last week, U.S. sovereign debt surpassed $40 trillion. The government now has to spend more than $1 trillion annually just to service its debt, and the problem is only getting worse.The day before the Treasury launched its disappointing buyback, President Donald Trump promised that if Republicans win the midterm elections and maintain control of the Senate, every American adult would receive $5,000. The president’s promise would add another trillion dollars to the debt.Against this backdrop, investors should ask themselves how much higher interest rates can realistically go.Analysts have explained that the Federal Reserve can fight inflation, but its room to raise rates is constrained by the nation’s deteriorating fiscal position.The gold market is paying attention to all of this. While the threat of a rate hike is keeping some investors away, at some point, the risk of not holding a diversified monetary asset will outweigh the opportunity cost of owning one.That is why investors should stop obsessing over the next 25 basis points and start paying attention to the next $1 trillion of debt.See live precious metals prices for gold, silver, platinum and palladium — in USD, CAD and 12 more currencies.
Gold prices holding its ground following muted U.S. CPI data
(Kitco News) – The gold market is struggling to find any solid direction on Friday as U.S. inflation pressures remain elevated but have not accelerated.However, analysts note that gold could face continued headwinds as the latest inflation data could force the Federal Reserve to raise interest rates next week.The Consumer Price Index (CPI) rose 0.4% in August, following a 0.1% increase in July, the U.S. Bureau of Labor Statistics announced Tuesday. The inflation data were in line with economists’ expectations.Over the past 12 months, headline inflation rose 3.4%, in line with economists’ expectations.Meanwhile, core CPI, which strips out volatile food and energy prices, rose 0.3% last month, up from 0.2% in July. Monthly core inflation was slightly hotter than expected, as consensus forecasts projected a 0.2% increase.Over the past 12 months, annual core inflation rose 2.4%, down slightly from 2.5% in July and in line with consensus estimates.Gold has managed to hold on to modest gains in its initial reaction to the latest inflation data. Spot gold last traded at $4,337.20 an ounce, up 0.5% on the day.
Gold price holds near high after preliminary Consumer Sentiment falls to 47.8, inflation expectations spike
(Kitco News) – The gold market is trading near session highs after the latest data showed consumer sentiment in the U.S. declining, with inflation expectations shooting higher.The University of Michigan announced on Friday that the preliminary reading of its Consumer Sentiment survey for September was 47.8. The data was far worse than expectations, as the consensus forecast of economists called for a reading of 51, and it was also well below August’’s final reading of 51.7.“Consumer sentiment receded less than 4 index points for the second consecutive month of decreases,” said Surveys of Consumers Director Joanne Hsu. “Democrats and Republicans alike posted sizable declines, while independents were little changed from August. Year-ahead expectations for both personal finances and business conditions plunged. With a resurgence in fuel prices and trade tensions, consumers anticipate greater pressures on their pocketbooks to come.”“Five-year expected business conditions remained stable at readings well below their historical average, suggesting that consumers believe that emerging risks this month may not have further worsened the long-run outlook,” she added. “Overall, sentiment is now 16% below February, prior to the start of the Iran conflict, and 13% lower than a year ago.”Spot gold continued to trade near the upper edge of its daily range in the minutes following the 10 am ET data release, and last traded at $4,389.43 per ounce for a gain of 1.68% on the day.The September index showed a sharp rise in year-ahead inflation expectations, while longer-run expectations also ticked higher.“Year-ahead inflation expectations jumped from 4.0% last month to 4.6% this month, the highest reading since June,” Hsu wrote. “The current reading substantially exceeds the 3.4% seen in February before the Iran conflict began, along with all 2024 readings. Long-run inflation expectations ticked up to 3.4%, ending three consecutive months at 3.3%. These expectations remain higher than their 2024 range of 2.8% to 3.2%.”
gold off its lows but largely ignores 2% drop in U.S. existing home sales
(Kitco News) – The gold market is off its lows but remains under pressure as the U.S. housing market continues to stabilize, with existing-home sales falling to their lowest level since February.Total existing-home sales, including single-family homes, townhomes, condominiums and co-ops, fell 2% to a seasonally adjusted annual rate of 3.96 million in August, the National Association of Realtors (NAR) announced Thursday.However, the decline was in line with economists’ expectations.NAR Chief Economist Lawrence Yun said that rising interest rates, which are driving mortgage rates higher, continue to have a significant impact on the U.S. housing sector.“Mortgage rates and home sales move in opposite directions, so it’s not surprising to see a mild dip in home buying activity due to high mortgage rates,” he said in the report. “Still, home prices are rising, and existing home sales are actually up 1.6% year-to-date through the first eight months of the year. Homebuying demand, despite higher interest rates, is no doubt being supported by rising wages, which grew 3.1% in August, along with 643,000 net new jobs added since the start of the year. Job creation and wage growth typically drive housing demand.”The gold market has been unable to attract a significant bid in reaction to the disappointing housing market data. Spot gold last traded at $4,365.50 an ounce, down 0.85% on the day.
Central bank gold moves are about repatriation, not liquidation
(Kitco News) – While the recent headline may give the impression that central banks are selling off some of their gold reserves, the gold has merely changed location in response to the rising perceived risk of sanctions and seizure, according to Rhona O’Connell, Head of Market Analysis for EMEA & Asia at StoneX.“News headlines last week captured the public’s imagination with the reports of the Netherlands’ central bank repatriating gold from North America into Europe,” wrote Rhona O’Connell, Head of Market Analysis for EMEA & Asia on Wednesday.O’Connell noted that between June 2025 and January 2026, the Banque de France sold 129 tonnes of its gold reserve in New York gold – representing less than 5% of its official sector holdings of 2,437 tonnes – before buying it back in Europe, effectively moving the gold to Paris.“Headlines at that time gave the misleading impression that France was selling its US gold holdings, and not mentioning that it was being replaced in Europe, i.e. a de facto location swap,” she said. “The Dutch have followed suit and, for the most part, using the same mechanism although only 59t were involved in a location swap (into London this time), but a further 27t were physically moved from New York and Ottawa into Zeist in the Netherlands (thereby presumably obviating the need to recast into LGD bars).”The risk of U.S. sanctions has been cited as the major driver for these moves. “The acceleration is widely attributed to the freezing of approximately $300 billion in Russian central bank reserves by Western nations in 2022, which signalled to non-aligned central banks that dollar-denominated reserves can be frozen or seized, whereas domestically vaulted gold cannot,” O’Connell wrote. “And of course, – again in the headlines recently – the Bank of England is holding Venezuelan gold that will remain frozen until (if) the UK Government recognises the current Venezuelan regime.”“The timing of the recent request for return and reports that the US was involved in the negotiations, suggest a potential link with the US-Venezuela transaction,” she added.On Sept. 2, the Dutch central bank, De Nederlandsche Bank (DNB), announced it had moved 86 of its 313 tonnes of gold from the U.S. and Canada to London.The DNB said it moved the gold to strengthen its crisis preparedness and improve the liquidity and tradability of its reserves. The central bank said that its gold reserves held in New York and Ottawa cannot be utilized as quickly and directly in such a situation.The central bank said that keeping a larger share of its gold reserves in London will strengthen the function of gold as an “anchor of trust.” It added that gold is seen as the ultimate reserve asset because it is ideally suited to hedge against extreme systemic risks.“With this relocation, we have improved the tradability of our gold reserves. We expect that we will never need to use them, but we do need to strengthen our resilience and preparedness,” said DNB Governor Olaf Sleijpen.Before the move, the DNB held nearly 31% of its gold domestically, about 18% in London, more than 31% in New York and nearly 20% in Ottawa.Following the transfer, 32% of its official reserves are now held in London, with New York and Ottawa holding 18.5% each.See live precious metals prices for gold, silver, platinum and palladium — in USD, CAD and 12 more currencies.
Gold is more than ‘a tactical expression of the next Fed decision’ and pullbacks are opportunities to ‘build strategic exposure’
(Kitco News) – Mounting fiscal concerns, elevated inflation and geopolitical uncertainty, and robust sovereign demand make a significant gold allocation a must-have in investor portfolios, according to commodity and currency analysts at UBS.“Gold has come under renewed pressure over the past two weeks amid rising US Treasury yields, hawkish comments from Federal Reserve Chair Kevin Warsh, and stronger-than-expected US payroll data,” the Swiss banking giant’s Chief Investment Office wrote in a note on Tuesday. “Following a 15% gain in the first three weeks of August, gold prices have since fallen 5.5%.“We now expect the Fed to raise policy rates by 50 basis points this year,” the analysts wrote. “The resulting pressure from higher real yields and a stronger US dollar is likely to remain a near-term headwind for gold. But just as we do not believe near-term Fed decisions undermine the medium-term outlook for global equities—which is supported by AI spending, resilient economic activity, and broad earnings growth—we do not think they diminish gold’s strategic role in a portfolio.”UBS believes that gold remains a valuable portfolio diversifier, particularly for investors who favor real assets. The analysts highlight a number of key factors that are expected to support gold prices over the medium term.The first of these is strong central bank demand for bullion. “The People’s Bank of China purchased 650,000 ounces of gold (around 20 metric tons) in August, up from 640,000 ounces in July and its largest monthly addition since October 2023,” they noted. “The purchase extended Beijing’s buying streak to 22 consecutive months, but China is not alone in seeking to increase its gold reserves. According to a recent World Gold Council survey, nearly 90% of surveyed central banks expected global official gold reserves to increase over the next 12 months, with 45% expecting their own holdings to rise.”“We continue to expect annual central bank purchases of between 750 and 1,000 metric tons, providing an important source of structural support for gold.”Fiscal concerns are also expected to reinforce the long-term trend of diversification away from the U.S. dollar and into alternative assets. “Higher US rates and resilient growth make the near-term US dollar outlook stronger, but persistent concerns about fiscal sustainability could constrain its appreciation over a longer horizon,” the analysts wrote. “Elevated government debt should also reinforce the gradual shift away from concentrated US dollar exposure. This should benefit gold, which is widely viewed as a reliable store of value and an alternative to traditional reserve currencies.”“Over the medium to long term, a weaker US dollar would also boost demand for the precious metal and support its price,” they added.Finally, UBS analysts said that gold helps insulate investors’ portfolios against the effects of inflation and geopolitical uncertainty. “Persistent inflation and geopolitical uncertainty reinforce gold’s role as a portfolio hedge and diversifier,” they said. “Institutional investors often cite gold’s performance during crises, its potential to hedge geopolitical risks, and its diversification benefits as reasons to maintain or increase their holdings. Gold has also historically offered protection against inflation over long periods. According to the Global Investment Returns Yearbook, real returns of gold and commodities since 1900 have been positively correlated with inflation.”For these reasons, UBS sees the long-term investment case for gold as constructive. “We view gold primarily as a portfolio hedge and diversifier, rather than as a tactical expression of the next Fed decision,” the analysts said. “Underallocated investors could use periods of weakness to build strategic exposure within a well-diversified portfolio.”In mid-August, UBS strategists said that falling real rates will drive investors back into gold, with a weaker dollar and strong central bank demand helping to propel prices back toward $5,000 per ounce in the first half of 2027.The Swiss banking giant pointed out that prices have successfully broken out of their recent $100 trading channel to rise above the $4,250 resistance area for the first time in two months. “Reported Chinese institutional buying and inflows into exchange-traded funds (ETFs) have supported the latest price movement, while recent joint government efforts by the US and Japan to stabilize the yen may also have helped reduce the risk of a sell-off in US Treasuries,” they wrote. “Near-term risks remain, especially if US data stay firm, oil prices keep inflation concerns alive, or markets continue to price in a more hawkish Federal Reserve rate path,” the strategists warned. “But while the immediate backdrop may remain volatile, the medium- to long-term case for gold still looks supported by several durable drivers. We expect gold prices to rise toward USD 5,000/oz in the first half of 2027.”UBS expects lower real interest rates will help to reignite investment demand for the yellow metal. “[W]e expect inflation to gradually moderate, allowing the Fed to hold interest rates steady this year before resuming easing in 2027,” they said. “This should create a more favorable backdrop for gold, as a shift toward lower policy-rate expectations would likely reduce real yields, weigh on the US dollar, and help boost investment demand for gold.”A softening U.S. dollar and ongoing diversification flows are also powerful medium-term tailwinds for the gold price. “The US dollar may stay resilient in the near term, but structural challenges including large US fiscal and external deficits and already elevated investor allocations to US dollar assets mean there is scope for renewed weakness,” the strategists wrote. “A weaker dollar has historically been a powerful tailwind for gold, while a renewed focus on diversification away from the US dollar should benefit the precious metal.”Meanwhile, sovereign gold purchases continue to provide a firm price floor beneath the market. “Central bank demand has remained an important pillar of support, even when private investment demand has been lackluster,” they said. “We expect annual central bank purchases to remain elevated, supported by a long-term desire to reduce exposure to USD assets.”UBS noted that central banks bought 289 tonnes of gold in Q2, and their in-house estimates project full-year purchases to total between 750-1,000 tonnes in 2026. “While these flows may not be enough to drive prices sharply higher on their own, they can help stabilize the market and offset weaker areas such as jewelry demand.”The Swiss bank advised investors to separate gold’s near-term trading risk from its longer-term investment case. “[P]eriods of weakness toward USD 4,000/oz or below may ultimately prove to be opportunities to build strategic exposure,” they said. “For investors with an affinity for real assets, we continue to view a mid-single-digit gold allocation as appropriate within a well-diversified portfolio.”See live precious metals prices for gold, silver, platinum and palladium — in USD, CAD and 12 more currencies.
Platinum could outperform gold price as debasement trade regains momentum
(Kitco News) – Inflation fears are driving expectations that the Federal Reserve will have to raise interest rates as early as next week, and they have taken their toll on the precious metals market, including platinum.However, despite the difficult macroeconomic environment, the World Platinum Investment Council (WPIC) said the platinum market’s underlying fundamentals remain relatively tight, with investment demand expected to improve through the second half of the year.In its latest Platinum Quarterly report, the WPIC said the precious metal is now expected to see a modest surplus of 265,000 ounces in 2026, a significant shift from its previous forecast for a 297,000-ounce deficit.In an interview with Kitco News, Edward Sterck, director of research at the WPIC, said that despite the volatility, the headline surplus masks an important shift in market conditions.He explained that the platinum market saw a surplus of 548,000 ounces during the first half of the year, driven overwhelmingly by investment liquidation. Nearly 600,000 ounces flowed out of ETFs and exchange inventories during the period.Despite expectations for an annual surplus, the WPIC expects the market to swing to a deficit of 283,000 ounces in the second half.“We’re back in deficit market conditions already,” Sterck said in an interview with Kitco News. “We have seen the selling stop, and we have seen some buying return.”Sterck said the weakness in platinum investment demand during the first half was not specific to the metal. Rising oil prices following the conflict in the Middle East drove inflation expectations higher and dramatically shifted expectations for U.S. monetary policy.“Ultimately, it was the conflict in the Middle East, increasing oil prices, higher inflation expectations, and therefore projections for two Fed rate hikes instead of two Fed rate cuts,” he said. “And that hit the whole of the precious metal complex. That wasn’t just a platinum-only story.”The WPIC noted that platinum prices fell 24% during the first half of the year and were down as much as 46% from January’s 2026 high of $2,875 an ounce. At the same time, ETF holdings declined by more than 500,000 ounces, equivalent to roughly one-seventh of holdings at the end of 2025.Although Federal Reserve Chair Kevin Warsh’s hawkish rhetoric continues to create volatility, Sterck said platinum has shown significant resilience. Precious metals have repeatedly sold off when expectations for a September rate hike have increased, only to attract renewed buying between those episodes.“Between these events, the metals have turned bid again, and actually, on average, they’ve been trending higher, even though they’ve been resetting a little bit each time we’ve had these bearish comments,” he said.Sterck said that resilience suggests investors remain concerned about currency debasement, rising government debt and persistent fiscal deficits.While gold remains the primary monetary metal in the debasement trade, platinum could provide investors with a higher-beta alternative. WPIC research shows the relationship between gold and platinum has changed dramatically since the end of 2024.Sterck said the correlation between platinum and gold was slightly negative between 2014 and the end of 2024, at -0.15. Since then, the correlation has risen to a strongly positive 0.95. At the same time, platinum’s beta to gold is around 1.3.“In theory, if gold is moving higher, platinum should outperform by about 30%,” he said, adding that the leverage works both ways if gold prices fall.The WPIC said platinum’s higher-beta characteristics are supported by a fundamentally tight physical market following three consecutive years of significant deficits. Although above-ground inventories are expected to rise this year, they are forecast to end 2026 at just 2.01 million ounces, representing only about 3.4 months of global demand.At the same time, Sterck said there are few prospects for meaningful growth in mine supply. WPIC expects mine production to remain essentially flat this year at 5.55 million ounces. Although higher prices could encourage modest production growth longer term, Sterck said there are no “transformational” supply projects expected during the next five to eight years.Meanwhile, industrial demand is emerging as an increasingly important pillar of support, particularly as the artificial intelligence buildout creates new sources of platinum consumption.WPIC expects industrial platinum demand to rise 5% this year to 2.385 million ounces, with glass demand increasing 23% and electrical demand rising 19%. The council said AI infrastructure requires platinum across advanced semiconductor manufacturing, printed circuit boards, hard drives and optical interconnects.Sterck said the scale of platinum’s exposure to artificial intelligence has surprised even the WPIC.“We hadn’t appreciated actually how many uses platinum, and also the other platinum group metals, have in AI,” he said.The report noted that platinum glass demand jumped 41% year-over-year in the second quarter as investment in AI servers, data centers and advanced electronics accelerated. Electrical demand increased 22%, driven by AI data centers, advanced semiconductor investment and strong demand for high-capacity hard drives.Sterck said the combination of improving investment demand, constrained mine supply and growing industrial consumption could quickly tighten the market again.The investment outflows during the first half helped reduce extreme physical-market tightness, pushing lease rates lower and moving the London market from backwardation into slight contango. However, Sterck said the market appears to have returned only to a relatively neutral position.“If any kind of change in terms of, let’s say, more positive investment demand [occurs], it would probably bring back that market tension very quickly,” he said.See live precious metals prices for gold, silver, platinum and palladium — in USD, CAD and 12 more currencies.
China’s central bank buys 20.2 tonnes of gold in August, largest purchase since 2023
(Kitco News) – The People’s Bank of China (PBoC) added 20.2 metric tonnes of gold to its reserves in August, its largest monthly purchase since October 2023, the State Administration of Foreign Exchange (SAFE) announced on Monday. Last month’s purchases brought the country’s total official holdings to roughly 2,387 tonnes. China has now increased its gold reserves for 22 consecutive months, and has added approximately 80 tonnes of bullion during the first eight months of 2026.The valuation of China’s gold reserves has also increased significantly, rising from $306.35 billion at the end of July to $350.08 billion by the end of August—an increase of roughly $43.7 billion last month alone. The PBoC has ramped up its gold purchases significantly since the yellow metal’s price pulled back earlier this year. In the latest central bank gold purchase update from the World Gold Council (WGC), Marissa Salim, Senior Research Lead, APAC noted that the Chinese and Polish central banks continue to lead all sovereign buyers in 2026.“Central banks continued their gold accumulation in July with net buying reported at 23t,” Salim wrote in the WGC’s latest update. “Emerging markets have also continued to accumulate gold this month with China (20t) and Poland (8t) taking the lead.”Other significant buyers in July included the Czech National Bank, which purchased two tonnes of gold for its 41st consecutive month of net buying, while the National Bank of Kazakhstan (NBK), Bank Negara Malaysia (BNM) and the Central Bank of Bolivia (CBB) each bought one tonne. “Kazakhstan’s gold holdings stand at 75% of its total reserves,” she noted.Year-to-date, Poland once again tops the scoreboard for gold purchases, buying 90 tonnes so far this year. “The country has accumulated 640t of gold – against its target of 700t – or approximately 28% of its total reserves,” Salim noted.Meanwhile, China’s recent gold purchases bumped them up to the sixth largest reported gold holder globally. “Notably, activity from the People’s Bank of China (PBoC) has picked up pace in recent months, with double-digit monthly purchases of gold since May 2026.”“On a y-t-d basis, central banks’ reported purchases have totalled around 130t of gold,” she wrote. “This compares to a reported ~160t which was purchased over the same period last year.”See live precious metals prices for gold, silver, platinum and palladium — in USD, CAD and 12 more currencies.
‘Synchronised build-up of physical, futures, and options exposure’ to drive gold price higher
(Kitco News) – ETFs, futures and options positioning all indicate that gold remains in a broad-based bull market in 2026, with multiple independent demand channels reinforcing one other, according to analysts at Société Générale.“Gold has entered a new phase of its 2026 bull run, one defined less by speculative momentum and more by broad-based, structural conviction across every category of market participant,” wrote Société Générale analysts Michael Haigh and Jeremy Sellem on Monday. “What began as a geopolitical shock, evolved over the following months into something far more durable: a synchronised build-up of physical, futures, and options exposure that now spans retail investors, professional money managers, and derivatives traders alike.”The analysts noted that last month’s gold ETF demand was historic in scale. “In August, gold ETFs registered a substantial 201 tonnes of net inflows, marking the third-largest monthly addition on record in tonnage terms after now famous world events: February 2009 and the stimulus package announced by the newly inaugurated Obama administration, and March 2020 with the start of the lockdown for Covid globally,” they said. “This month’s inflow surpassed the strong inflows recorded in March 2022 following Russia’s invasion of Ukraine and in September 2012 after the Federal Reserve’s announcement of QE3.””In notional exposure terms (contracts x price x contract size), money managers’ net positioning reached the second-largest long exposure on record, behind only January 2026, when gold broke through $5,400/oz to an all-time high,” Haigh and Sellem wrote. “This time, with prices roughly $1,000/oz lower, the scale of the dollar exposure is even more striking: it is no longer simply a price story.”Société Générale sees the yellow metal’s broader market positioning as supportive of higher prices over the medium term.“Overall, investors appear to be pricing near-term uncertainty via puts while steadily building call exposure further out the curve, consistent with a constructive medium-term outlook for gold,” they said.Last week, analysts at Société Générale said that after decreasing their gold position in the first half of the year, the precious metal is looking attractive again.“Gold has recently rebounded towards $4,500/oz following sharp corrections triggered by the US-Israel-Iran conflict and rising Fed rate hike expectations. At the same time, volatility has normalised, speculative positioning has recovered above its two-year average, and the GLD put/call ratio has fallen to a six-month low, signalling a renewal in bullish sentiment,” the analysts said.Although gold continues to face headwinds from elevated interest rates and a stronger U.S. dollar, Société Générale said much of the Federal Reserve’s hawkish repricing has already been absorbed by financial markets, creating a more favorable risk/reward profile for the precious metal.The French bank said it remains “strategically bullish” on gold, viewing the precious metal as an important hedge against monetary and policy uncertainty.“A clear post-2022 regime shift has emerged. Despite persistently positive real yields, gold has continued to trade near record highs, breaking away from historical models that would imply significantly lower prices. Structural factors such as sustained central bank purchases, dedollarisation trends, geopolitical uncertainty and sovereign debt concerns appear to be providing a higher floor for gold prices, limiting the downside impact of elevated real rates,” the analysts said.Société Générale noted that since the middle of last year, markets have moved from pricing in additional monetary policy easing to debating whether the Federal Reserve will raise interest rates once or twice more. That shift has pushed two-year Treasury yields back above 4% and supported the U.S. dollar.However, despite those traditional headwinds, gold remains well above its mid-2025 levels.“In our view, it would take a materially larger inflation shock and a much more aggressive Fed response to generate another significant repricing in rates,” the analysts said. “With much of the hawkish adjustment already reflected in financial markets, the downside risk for gold appears increasingly limited.”Société Générale’s renewed bullish outlook comes as gold attempts to recover from the sharp correction that dominated trading through the spring and early summer. Expectations that the Federal Reserve could be forced to raise interest rates again have remained one of the biggest obstacles for the precious metal.Those expectations intensified following Federal Reserve Chair Kevin Warsh’s hawkish comments at the central bank’s annual symposium in Jackson Hole last week. Warsh reiterated that policymakers remain focused on bringing inflation sustainably back to the central bank’s 2% target.However, Société Générale sees limits to how aggressively the Federal Reserve will ultimately be able to tighten monetary policy.The bank’s economists expect interest rates to remain unchanged through 2027 under their base-case scenario, although they acknowledge that persistent inflation could force policymakers to raise rates once this year. The bank said a September or December hike would be more likely than a move in October.At the same time, Société Générale sees persistent inflation as another reason investors should maintain strategic exposure to gold.The bank said a renewed wave of U.S. tariffs, accelerating investment in artificial intelligence and infrastructure, volatile energy prices and persistently large fiscal deficits across developed economies are creating a more inflationary environment than financial markets currently anticipate.Société Générale noted that markets were pricing in only modest additional Federal Reserve tightening when its report was published. The bank said even those expected rate hikes would not be enough to bring monetary policy in line with the Atlanta Federal Reserve’s Taylor Rule model, suggesting inflation risks remain underpriced.Along with an improving macro backdrop, the analysts said gold’s underlying demand profile continues to provide important support.Although inflows into gold-backed exchange-traded funds have moderated sharply this year, they remain positive. At the same time, lower volatility is improving gold’s appeal to longer-term reserve managers rather than short-term momentum traders.The analysts said this shift could ultimately create a more durable foundation for the precious metal.China continues to steadily increase its gold reserves, while diversification away from traditional reserve assets remains a structural priority for many emerging-market central banks.“As speculative demand fades and official-sector buying remains robust, central banks are increasingly becoming the key anchor for the gold market,” the analysts said.Société Générale said declining volatility itself has historically been an important buy signal for gold, while continued central-bank demand should provide a durable floor underneath prices.See live precious metals prices for gold, silver, platinum and palladium — in USD, CAD and 12 more currencies.
