Gold prices have risen for five consecutive weeks! Diverging policy signals and the risk of a technical correction coexist. Can the 3630 support level hold?
2025-09-20 08:12:11
Gold prices rose on Friday, extending their fifth consecutive weekly gain, as the market awaited further clues following the Federal Reserve's first interest rate cut of the year. Spot gold was trading at $3,684.93 per ounce, up 1.12%. For the week, gold prices rose 1.15%. U.S. gold futures for December delivery closed up 0.7% at $3,707.35.
The Federal Reserve cut its key interest rate by a quarter percentage point on Wednesday, but warned of persistent inflation, casting doubt on the pace of future easing. Spot gold prices hit a record high of $3,707.40 an ounce following the decision, before retreating in choppy trading.
"Gold is still quite strong here and is just pausing after the Fed," said Bob Haberkorn, market strategist at RJO Futures. "The bullish trend remains intact and new highs are inevitable. Realistically, we could easily reach $4,000 before the end of the year."
"After Wednesday's rate cut sent mixed signals to the market, the market now prices a 92% probability of an October rate cut by the Fed," ADM Investor Services said in a note.
Minneapolis Fed President Neel Kashkari said risks in the job market justified this week's rate cut and that the Fed could also cut rates at its next two meetings.
ADMIS said this is supportive for gold, adding that Fed policy is a “key driver of price direction.” Another factor supporting gold is the willingness of central banks to continue increasing their gold reserves, the firm said.
Physical gold premiums in India rose to a 10-month high this week as record prices ahead of the festive season failed to deter investors from buying bars in anticipation of further gains, while price discounts in the Asian giant widened to a five-year high.
Minneapolis Fed President Neel Kashkari said risks in the job market justified this week's rate cut and that the Fed could also cut rates at its next two meetings.
Citigroup raised its gold price forecast on Friday, predicting that gold will reach $3,800 an ounce in the next three months, higher than its previous forecast of $3,600, citing cyclical and structural factors that are expected to support gold prices in the short term.
The bank said continued weakness in the U.S. job market and tariff-fueled concerns about U.S. and global economic growth are likely to keep cyclical pressures supporting gold prices.
In terms of structural factors, Citi pointed out that concerns about the US fiscal deficit, the status of the US dollar and the independence of the Federal Reserve are growing.
“In our base case scenario (60% probability), we see gold prices reaching a new all-time high of $3,800 an ounce in the coming months before peaking in the first quarter of 2026 as the economic growth outlook eventually improves and a rotation out of gold ensues,” Citi added.
The bank said that if the United States faces stagflation or a hard landing of the economy, prompting the Federal Reserve to cut interest rates aggressively and investment demand to increase, gold prices could hit $4,000 an ounce in the coming months.
However, the bank added that gold could fall to $3,400 an ounce if remaining tariff negotiations progress quickly, geopolitical risks ease and the U.S. economy remains stable, reducing the need for policy easing.
"I don't think the metals market liked Powell's comments that he was firmly against the idea of a 50 basis point rate cut," John Caruso of RJO Futures said in a note. Caruso added that the Fed's plans for multiple future rate cuts will support gold prices in the long run.
In an interview, U.S. Treasury Secretary Jeffrey Bessant encouraged the Federal Reserve's aggressive interest rate cuts. He said, "President Trump has been very astute in his economic management, and I think he's been right almost every time he criticizes the Fed." "The problem is, the Fed has been lagging behind. We hope they'll start catching up in a bold way."
On Thursday, Kevin Hassett, the White House National Economic Council Director and a leading candidate for the next Federal Reserve chairman, said the Fed's 25 basis point rate cut was a good first step toward significantly lowering interest rates. Analysts believe Hassett's comments indicate the White House appears to endorse the Fed's decision.
Analysts believe that the Fed's 25 basis point rate cut can be seen as a buffer and a statement to address the dissatisfaction generated by the White House through partial concessions.
A phone call between China and the United States on Friday showed signs of optimism about trade. Furthermore, Trump stated in the Oval Office on Friday that the US government will "very likely" be shut down due to the impasse with Democrats. "We'll continue to communicate with the Democrats, but I think it's very likely that the government will be shut down for a period of time," Trump told reporters in the Oval Office on Friday. Earlier on Friday, Senate Republicans and Democrats each rejected a temporary funding plan proposed by the other.
Capital.com analyst Kyle Rodda said that market sentiment remains bullish, but has certainly cooled. The Federal Reserve has basically not really provided the dovish guidance needed for gold to rise. The forecast of two more rate cuts this year is a positive factor. However, the forecast of only one rate cut in 2026 is higher than the market pricing, which has the effect of pushing up yields and the dollar.
Technical analyst Wang Tao believes that from a technical perspective, spot gold may fall below the support level of $3,630 per ounce and fall into the range of $3,596 to $3,617.
The Federal Reserve cut its key interest rate by a quarter percentage point on Wednesday, but warned of persistent inflation, casting doubt on the pace of future easing. Spot gold prices hit a record high of $3,707.40 an ounce following the decision, before retreating in choppy trading.
"Gold is still quite strong here and is just pausing after the Fed," said Bob Haberkorn, market strategist at RJO Futures. "The bullish trend remains intact and new highs are inevitable. Realistically, we could easily reach $4,000 before the end of the year."
"After Wednesday's rate cut sent mixed signals to the market, the market now prices a 92% probability of an October rate cut by the Fed," ADM Investor Services said in a note.
Minneapolis Fed President Neel Kashkari said risks in the job market justified this week's rate cut and that the Fed could also cut rates at its next two meetings.
ADMIS said this is supportive for gold, adding that Fed policy is a “key driver of price direction.” Another factor supporting gold is the willingness of central banks to continue increasing their gold reserves, the firm said.
Physical gold premiums in India rose to a 10-month high this week as record prices ahead of the festive season failed to deter investors from buying bars in anticipation of further gains, while price discounts in the Asian giant widened to a five-year high.
Minneapolis Fed President Neel Kashkari said risks in the job market justified this week's rate cut and that the Fed could also cut rates at its next two meetings.
Citigroup raised its gold price forecast on Friday, predicting that gold will reach $3,800 an ounce in the next three months, higher than its previous forecast of $3,600, citing cyclical and structural factors that are expected to support gold prices in the short term.
The bank said continued weakness in the U.S. job market and tariff-fueled concerns about U.S. and global economic growth are likely to keep cyclical pressures supporting gold prices.
In terms of structural factors, Citi pointed out that concerns about the US fiscal deficit, the status of the US dollar and the independence of the Federal Reserve are growing.
“In our base case scenario (60% probability), we see gold prices reaching a new all-time high of $3,800 an ounce in the coming months before peaking in the first quarter of 2026 as the economic growth outlook eventually improves and a rotation out of gold ensues,” Citi added.
The bank said that if the United States faces stagflation or a hard landing of the economy, prompting the Federal Reserve to cut interest rates aggressively and investment demand to increase, gold prices could hit $4,000 an ounce in the coming months.
However, the bank added that gold could fall to $3,400 an ounce if remaining tariff negotiations progress quickly, geopolitical risks ease and the U.S. economy remains stable, reducing the need for policy easing.
"I don't think the metals market liked Powell's comments that he was firmly against the idea of a 50 basis point rate cut," John Caruso of RJO Futures said in a note. Caruso added that the Fed's plans for multiple future rate cuts will support gold prices in the long run.
In an interview, U.S. Treasury Secretary Jeffrey Bessant encouraged the Federal Reserve's aggressive interest rate cuts. He said, "President Trump has been very astute in his economic management, and I think he's been right almost every time he criticizes the Fed." "The problem is, the Fed has been lagging behind. We hope they'll start catching up in a bold way."
On Thursday, Kevin Hassett, the White House National Economic Council Director and a leading candidate for the next Federal Reserve chairman, said the Fed's 25 basis point rate cut was a good first step toward significantly lowering interest rates. Analysts believe Hassett's comments indicate the White House appears to endorse the Fed's decision.
Analysts believe that the Fed's 25 basis point rate cut can be seen as a buffer and a statement to address the dissatisfaction generated by the White House through partial concessions.
A phone call between China and the United States on Friday showed signs of optimism about trade. Furthermore, Trump stated in the Oval Office on Friday that the US government will "very likely" be shut down due to the impasse with Democrats. "We'll continue to communicate with the Democrats, but I think it's very likely that the government will be shut down for a period of time," Trump told reporters in the Oval Office on Friday. Earlier on Friday, Senate Republicans and Democrats each rejected a temporary funding plan proposed by the other.
Capital.com analyst Kyle Rodda said that market sentiment remains bullish, but has certainly cooled. The Federal Reserve has basically not really provided the dovish guidance needed for gold to rise. The forecast of two more rate cuts this year is a positive factor. However, the forecast of only one rate cut in 2026 is higher than the market pricing, which has the effect of pushing up yields and the dollar.
Technical analyst Wang Tao believes that from a technical perspective, spot gold may fall below the support level of $3,630 per ounce and fall into the range of $3,596 to $3,617.
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