Date: 17th September 2025.
Gold Analysis Ahead of Tonight’s Fed Rate Decision!
Gold prices continue to rise, pushing the commodity to a new all-time high. Investors are watching closely the upcoming Federal Reserve Rate Decision and Press Conference thereafter. Due to this event, market participants are not adding to their exposure levels until further clarity is obtained from the Federal Reserve.
As a result, Gold prices are forming a similar retracement to that seen on the 9th. What will determine if Gold’s trend will continue or if traders will start to lock in profits?
XAUUSD (Gold) 12-Hour Chart
The Federal Reserve Driving Gold Prices
Analysts widely expect the Federal Reserve to cut interest rates by 25 basis points. The Chicago exchange is currently placing a 0.25% cut as a 96% possibility. If we follow traditional economics, the cut can cause only a short-term weakening of the US Dollar, as the market has largely priced in this scenario. Some economists advise that the cut alone cannot create volatility, as it is already fully priced.
However, trends will depend on updates to economic forecasts and the tone of remarks from Chairman Jerome Powell. Investors will be scrutinising Mr Powell’s press conference to obtain indications of how many cuts we will witness in 2025. The press conference will take place at 18:30 GMT.
If Powell emphasises the risks of rising inflation and that the committee is neutral on future cuts, it would signal a more cautious approach to monetary easing. Conversely, if his focus is on cooling labour and housing markets, it could suggest a more ‘dovish’ stance. If so, the market would expect a further 0.25% cut in October and again in December. There is a 74% chance of 3 rate cuts by the end of 2025. Citibank is the latest to advise that they no longer expect a 0.50% cut tonight. Instead, the bank expects a series of cuts throughout the rest of 2025.
Some officials are considering the risk of higher price pressures a greater concern than current employment trends. As a reminder, the Consumer Price Index rose 2.9% in August, up from 2.7% in July, reaching its highest level since January. On the other hand, many members of the Federal Open Market Committee are concerned about the employment sector, where the unemployment rate has again risen.
Economic data in the US is not currently painting a clear picture, with conflicting data. For example, the US Retail Sales from yesterday rose above expectations, boosting confidence in the US economy. In addition to this, the recent PMI reports also rose above expectations. However, other data gives a real cause for concern. For this reason, the Federal Reserve is largely concentrating on Inflation and Employment Data.
Other Central Banks and Gold Contracts
Markets are also closely watching the Bank of Canada’s meeting today at 15:45 (GMT+2), where the central bank may cut its rate by 25 basis points, from 2.75% to 2.50%. Tomorrow, the Bank of England meets on Thursday at 13:00 (GMT+2), followed by the Bank of Japan on Friday. Neither is expected to change policy, but the press conference will again be key.
Furthermore, according to the latest report from the US Commodity Futures Trading Commission (CFTC), positions backed by real money stood at 199.305 thousand long versus 32.888 thousand short. During the week, bullish traders closed 2.491 thousand contracts, while bearish traders closed only 0.046 thousand.
Further, the bias remains in favour of an upward trend, but profit-taking amongst buyers outnumbers sellers closing their short positions.
Key Takeaways:
Gold prices continue to rise as investors await the Federal Reserve’s rate decision and press conference. However, a retracement forms as investors are aware of the Fed clarification.
Analysts expect a 0.25% cut, but Gold trends will depend on Powell’s tone and economic forecasts. These include inflation and employment risks.
Gold buyers are hoping for a further 0.25% cut in October and again in December. There is a 74% chance of 3 rate cuts by the end of 2025.
According to the CFTC's latest report, a bullish bias remains as ‘long’ contracts outnumber sellers.
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Please note that times displayed based on local time zone and are from time of writing this report.
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Michalis Efthymiou
HFMarkets
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