Gold Prices Expected to Rise for the First Time in Five Months After Fed Holds Rates Steady

The Federal Reserve, as expected, kept the federal funds rate in the range of 3.50% to 3.75%. Despite internal voting discrepancies (9 votes to hold, 3 votes to raise by 0.25%), and the Fed's continued hawkish stance, this decision triggered a "relief rally" in the gold market. Gold prices initially surged by $40 after the announcement, although they later retreated, they remained above $4,000 per ounce. Fed Chair Kevin Warsh did not provide clear forward guidance and expressed optimism about the U.S. economy's resilience and inflation environment. However, Warsh also emphasized that further rate hikes are not ruled out if inflation continues to deviate from the 2% target. Analyst Helen Amos noted that the market is closely watching the Jackson Hole Global Central Bank Meeting at the end of August, which is expected to be the next significant trigger for gold prices. Geopolitical tensions in the Middle East, particularly the ongoing U.S.-Iran conflict, have driven up energy prices, creating a double-edged sword for precious metals: while it supports expectations of sustained high rates (which is unfavorable for non-interest-bearing gold), it also sparks safe-haven and dip-buying demand. This week, the U.S. and Iran exchanged fire again, with the U.S. striking multiple targets in Iran, and Saudi Arabia proposing a multinational alliance to protect Red Sea shipping. Although gold prices have fallen by about a fifth since the start of the war, recent strong "buy-on-dip" trends have supported gold prices above the $4,000 mark. As of Friday (31st), spot gold was reported at $4,096.29 per ounce, with a monthly gain of nearly 2% and a projected weekly increase of 1.1%. Other precious metals saw spot silver stable at $58.98 per ounce, while platinum and palladium experienced slight declines.