Gold Price Projections

Gold prices have reached new all-time highs. This rise is driven by a cautious approach ahead of the Federal Open Market Committee (FOMC) decision. The price increase followed a US Consumer Price Index (CPI) report and a higher-than-expected number of initial jobless claims, although many claims were found to be fraudulent. Despite this, labor market data shows strength. Fewer continuing claims indicate potential improvements. Unless there are negative signals, the positive sentiment may last until the FOMC decision or another market event. Lower real yields and the expected dovish response from the Fed support a long-term uptrend. On the other hand, rising interest rate expectations could lead to short-term corrections. On a daily chart, gold’s upward trend is strong, with buyers targeting a major trendline at the 3,400 level. Sellers may wait for a break below that level to aim for a drop to 3,120. Looking at a 4-hour chart, small upward trends enhance bullish momentum, while sellers are ready to challenge at 3,400. In the 1-hour chart, prices are stabilizing above recent highs, providing minor support. Buyers are likely to keep prices up around the 3,675 level, while sellers aim for a decline to the 3,620 support. Upcoming reports, including US Retail Sales, the FOMC announcement, and jobless claims, could impact market movements.

Market Expectations

Gold is hitting new highs ahead of tomorrow’s FOMC meeting. The market expects a dovish stance, especially after the August 2025 CPI report showed core inflation cooling to 2.8%. This is reflected in fed funds futures, which show over a 90% chance the Fed will keep rates steady. However, we should consider signs of economic strength that might surprise investors. Fraudulent jobless claims from Texas masked a tight labor market, and today’s retail sales report for August 2025 was better than expected at +0.5%. This raises the risk that the Fed’s statement could be more hawkish than anticipated. The difference between dovish expectations and strong data suggests that gold derivatives may be undervalued. Traders should think about using options strategies like straddles or strangles ahead of the announcement to benefit from significant price movements in either direction. Implied volatility on near-term options has risen to 18%, which could seem low if the Fed surprises the market. For those feeling bullish, long call positions or call spreads targeting prices above current highs seem sensible. If the Fed confirms a dovish stance, gold could quickly reach the $3,750-$3,800 range. Major trendline support around $3,400 offers a clear risk management point for long-term bullish strategies. On the flip side, the risk of a hawkish pullback is notable, reminding us of the market’s eagerness for a shift back in late 2023. A drop below the $3,675 level could trigger put options, with an initial target near the $3,620 support. A surprisingly strong stance from the Fed could easily reverse recent gains and push gold back towards the $3,400 trendline. The key will be to focus not just on the headline rate decision but also on the Fed’s language and economic outlook tomorrow. The fraudulent claims data reminds us that early reports can be misleading. We should be ready for the Fed to emphasize that their fight against inflation isn’t over, despite recent progress. Create your live VT Markets account and start trading now.

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