Since the US Federal Reserve’s 25 basis points September rate hike, gold has traded modestly lower to levels of around USD 4,150 per oz.
Since the US Federal Reserve’s 25 basis-point September rate hike, gold has traded modestly lower to levels of around USD 4,150 per oz. The downward move has been rather muted, considering the huge rise in both nominal and real inflation-adjusted interest rates. US 10-year yields have risen to highs of 5.30%, and 10-year TIPS yields (a proxy for real interest rate expectations) have risen to levels of just below 3%. Normally, we would expect gold to decline materially in such circumstances. The modest decline suggests that gold–interest rate correlations have continued to wane.
Throughout August and into early September, investors increased their gold exposures. Retail investors upped their ETF positions and institutional investors increased net longs in the futures markets. These flows are normally highly interest rate sensitive; however, there has been little to no discernible reaction to the large rise in long-end interest rates so far. We believe that most of the move in interest rates is now largely complete, giving only limited downside risks for gold and the wider precious metals complex from current levels.
Central banks have continued to buy gold, and China’s central bank has been one of the largest purchasers this year. The pool of central banks adding to their gold holdings this year has narrowed, though this likely reflects elevated prices rather than an unwillingness to increase gold holdings. The World Gold Council’s latest survey showed that a record 45% of central banks expected to raise their gold holdings over the coming year. This means that gold is likely to be well supported by central bank purchases on any significant dip in pricing.
In the short term, gold is likely to trade within a tight range. Markets have moved to price in at least three further 25-bp rate hikes in the coming months, but these expectations appear to be on the high side. Most of the rise in US core inflation dynamics reflects one-off factors, giving the US Federal Reserve room to ease up on potential rate hikes once the situation in the Middle East is resolved.
The most pressing upside risk for gold in the coming months would be a potential revaluation of the US Treasury’s gold holdings, which are estimated at just over 8,000 tons. A revaluation towards current market prices would implicitly devalue the USD relative to gold, thus sending a strong signal to the market and potentially restarting the ‘debasement trade’ which played out in 2025.
The opinions expressed herein are correct as at 10 October 2026 and are subject to change without notice. This information should not be relied upon by the reader as research or investment advice regarding any particular fund, strategy or security. Past performance is not a guide to current or future results. Any forecast, projection or target, where provided, is indicative only and is not guaranteed in any way.
