The Fed dropped 25 basis points at its last policy meeting in August and is expected to do the same in September, bringing rates to a range of between 1.75% and 2%. The on Investing.com is showing a 92% chance so far for another 25-bp cut.
If that happens, gold could regain steam for an upward trek. There’s still plenty of scope for the yellow metal to extend its rally on the potential for more dismal global news or data. Futures are up about 18% on the year while the spot price is about 16% higher.
But the opposite could also happen, with gold spiraling downward from here.
TD Securities is among those doubting that the Fed would deliver another cut, especially if financial markets were back in risk-on mode.
“Should the positive trade headlines cluster, we could well see the precious metals complex consolidate lower, particularly given that other event risks have somewhat simmered, ahead of the various central bank meetings in September,” the Canadian broking group said in a note.
