Gold price holds near record ahead of Fed interest rate decision

Gold (GC=F)

Gold prices remained largely unchanged on Monday morning, hovering just below record highs, as investors awaited the anticipated rate cut from the US Federal Reserve this week. While the prospect of lower rates continued to support gold, profit-taking and a stronger dollar capped any further gains.

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3,678.40

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As of 4:45:54 AM EDT. Market Open. Advanced Chart

At the time of writing, gold futures (GC=F) retreated 0.4% to $3,672.20 per ounce, while the spot price of gold was muted at $3,641.55 a troy ounce, after hitting a record high of $3,673.95 last week.

The temptation by traders to lock in profit and some resilience from the dollar was putting pressure on gold (GC=F), KCM Trade chief market analyst Tim Waterer said.

"The bullish outlook remains in place; however, a period of consolidation or a minor pullback would arguably be a healthy outcome that supports gold's ambitions for hitting loftier price targets down the road," Waterer said.

The US dollar index (DX-Y.NYB), which measures the greenback against a basket of six currencies, was up by 0.1% to 97.56, making dollar-priced gold (GC=F) more expensive for international buyers. The strength of the dollar acted as a counterweight to gold's gains.

US inflation data for August came in slightly above expectations on Thursday, but investors anticipate this will not deter the Fed from cutting rates by a quarter-percentage-point on Wednesday.

"The risk for gold (GC=F) this week is that the Fed may not be so clear-cut in signalling when further rate cuts could arrive," Waterer said.

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Gold (GC=F), a non-yielding asset, is often viewed as a safe haven during periods of market volatility, and its appeal tends to increase in low-interest-rate environments.

The Fed’s meeting this week comes amid a backdrop of challenges, including a legal dispute over its leadership and political pressure from US president Donald Trump, who has sought to exert greater influence over the central bank’s monetary policy.

Goldman Sachs (GS), in a note released on Friday, expressed an optimistic long-term view on gold (GC=F) but warned of potential short-term risks.

For gold (GC=F), "while we see the risks to our $4,000/toz mid-2026 forecast as skewed to the upside, rising speculative length raises the risk of tactical pullbacks, as positioning tends to mean-revert," the investment bank said.

Oil (BZ=F, CL=F)

Oil prices climbed in early European trading as investors assessed the potential impact of Ukrainian drone attacks on Russian refineries, which could disrupt crude and fuel exports. At the same time, market participants are closely monitoring signs of growth in US fuel demand.

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67.24

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As of 4:45:39 AM EDT. Market Open. BZ=FCL=F

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Brent crude (BZ=F) futures gained 0.5% to trade at $67.34 per barrel at the time of writing, while West Texas Intermediate (CL=F) futures rose 0.6% to $63.03 a barrel.

JPMorgan (JPM) analysts noted that the recent drone attack on the Primorsk oil terminal showed a growing willingness to target international oil markets. “The attack suggests a growing willingness to disrupt international oil markets, which has the potential to add upside pressure on oil (BZ=F, CL=F) prices," the analysts wrote.

Primorsk, which can load approximately 1 million barrels per day (bpd) of crude, is a key export hub for Russian oil (BZ=F, CL=F) and the largest port in western Russia. The incident has raised concerns about potential disruptions to Russian oil exports.

“If we are seeing a strategic shift by Ukraine towards Russian oil exporting infrastructure, that brings upside risks to forecasts,” IG Markets analyst Tony Sycamore said, despite ongoing concerns around oversupply as OPEC+ plans to ramp up output.

Read more: London house prices slip as sellers brace for possible tax change

Meanwhile, investors are also watching as US-China trade talks kicked off in Madrid on Sunday. The discussions are focused on Washington’s demand that its allies impose tariffs on Chinese imports linked to the country’s purchases of Russian oil (BZ=F, CL=F).

Adding complexity to the oil (BZ=F, CL=F) market’s outlook, recent data from the US showed softer job growth and rising inflation, which raised concerns about the state of the world’s largest economy and its oil demand.

Pound (GBPUSD=X, GBPEUR=X)

The pound pushed higher this Monday morning against its major peers, benefiting from expectations of a policy divergence between the Federal Reserve and the Bank of England (BoE).

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1.3584

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As of 9:55:48 AM GMT+1. Market Open. GBPUSD=XGBPEUR=X

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Sterling climbed by 0.2% to $1.3582 against the greenback, while also climbing by the same margin to €1.1571 against the euro.

Forex traders are turning their attention to Wednesday’s UK Consumer Price Index (CPI) data for August, which will provide insight into the country’s inflationary pressures ahead of the Fed policy meeting.

Following the Fed’s decisions, traders are expected to shift focus toward the Bank of England’s rate decision, looking for any new signals regarding the BoE’s next steps on interest rates.

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Concerns over the UK's economic growth are expected to influence market sentiment, with traders increasingly betting on further rate cuts by the BoE before the end of the year. Markets have priced in roughly a 33% chance that the central bank will lower borrowing rates once more in 2025. However, it is widely expected that Threadneedle Street will leave rates unchanged this Thursday.

In equities, the FTSE 100 (^FTSE) was lower on Monday morning, down 0.1% to trade at 9,273 points. For more details on market movements, check our live coverage here.

Read more:

London house prices slip as sellers brace for possible tax change Average UK rent rises by £80 per week over five years Finance week ahead: Fed and Bank of England interest rates, UK inflation, FedEx, Barratt Redrow and Next

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