Gold held close to all-time highs on Monday, with spot prices trading around 3,650 dollars an ounce after setting a record near 3,674 last week.
The market tone was calm heading into the Federal Reserve’s two-day meeting on September 16 and 17, where investors expect policy makers to begin easing after a long pause.
The path the Fed sketches for rates over the next year may matter more for bullion than the first step itself.
Futures markets imply a high likelihood of a quarter point reduction in the target range, according to the CME FedWatch tool, a benchmark for translating fed funds pricing into probabilities.
A move to start cutting would validate the rates narrative that helped propel gold through the summer, when lower real yields and a softer trajectory for policy boosted the appeal of an asset that pays no income.
The meeting will also deliver a new Summary of Economic Projections and the dot plot, which together will shape expectations for how fast and how far rates could fall. The Fed’s official calendar confirms the meeting dates.
Even without a fresh high, the metal’s resilience is notable. The 10-year Treasury yield has hovered near 4 percent and the dollar has been steady, a mix that normally caps rallies in precious metals.
That dynamic has not derailed bullion’s advance. Investors are still hedging against policy uncertainty and geopolitical risk while looking for store-of-value assets that can hold up if growth cools.
The latest leg higher also follows a run of mixed U.S. data that pointed to moderating momentum, which in turn reinforced the case for easier policy.
What happens Wednesday could swing gold in either direction. If the Fed cuts but signals only a very gradual path lower for rates, gold could see a brief pullback as traders temper hopes for swift easing.
If the statement and projections hint at a faster glide path, or if Chair Jerome Powell sounds comfortable with inflation progress, bullion could find another burst of demand.
A surprise hold would likely spark knee-jerk selling, yet the reaction might fade if policy makers pair patience now with clearer guidance for reductions before year-end.
Beyond the policy choreography positioning looks constructive, Momentum funds have added exposure during the autumn breakout and macro funds have used dips to rebuild longs.
Physical demand from central banks and retail buyers has been steady through 2025, providing a floor on days when macro flows turn choppy. Exchange-traded funds tied to bullion remain a wild card.
Modest inflows have returned alongside the price surge, but sustained allocations from wealth managers would be a stronger signal that gold’s role in diversified portfolios is expanding.
Elevated gold supports margins for miners and royalty companies that kept costs in check through the last inflation spike for equity investors. It also complicates the picture for jewelers and electronics makers who face higher input prices.
Options markets show active interest around round-number strikes near 3,700 dollars, where dealers may hedge aggressively and amplify short-term swings. That argues for caution around the policy headlines, especially for traders using leverage.
The broader macro backdrop still favors dips being bought, if disinflation continues and the economy slows toward trend, real yields can grind lower even without a dramatic policy pivot, which has historically supported gold.
The risk to that view is a rebound in inflation that forces the Fed to keep rates higher for longer. In that scenario, bullion’s cushion would need to come from renewed dollar weakness or renewed haven demand, neither of which is guaranteed on a straight line.
The metal sits a few dollars below last week’s peak, waiting for the central bank to clarify the road ahead. The Fed will not set gold’s price on its own, but it will define the contours of the debate investors have been having all year.
With policy at an inflection point and growth risks still in play, the bar for abandoning a successful hedge remains high.
