Gold climbed toward $4,330 per ounce on September 17, defying a Federal Reserve interest-rate increase that would normally weigh on the metal. UBS expects near-term volatility but stays constructive on gold over the next 12 months, pointing to central bank buying and a weaker dollar ahead.
XAUUSD gained around 1.6% and rose toward $4,330 per ounce on September 17, a day after prices touched roughly six-week lows. The move came hours after the Fed raised its target rate by 25 basis points to 3.75-4.00% on September 16 — a decision that would typically strengthen the dollar and pressure gold.
Why gold shrugged off a hawkish Fed
The rate hike had already been priced in, so some traders began closing short positions once the announcement landed. Investors are now focused on how much further the Fed can tighten, not on the hike itself. A pause in the oil rally has eased some inflation concerns, while continued tension in the Middle East keeps safe-haven demand for gold intact.
UBS sees near-term pressure, longer-term support
According to UBS: strategist Giovanni Staunovo described the move as "a hawkish hike, ending its long pause", noting most policymakers expect at least one more increase this year. UBS said elevated U.S. real yields and a stronger dollar raise the opportunity cost of holding gold in the near term. The bank said gold ETFs recorded solid inflows in August amid concerns about Fed independence and rising debt, though some of those holdings could see outflows after the perceived hawkish tone of this week's meeting.
Despite that, Staunovo said the decision does not undo gold's longer-term case. He pointed to rising global debt, an expected weaker dollar over time and likely Fed rate cuts next year as support for demand.
Central banks keep adding to reserves
Central bank buying remains a structural pillar under the metal. The People's Bank of China added roughly 20 metric tons of gold in August, extending its buying streak to 22 consecutive months, while the National Bank of Poland and the central bank of Uzbekistan each added about 8 metric tons. Staunovo said he continues to expect annual central bank purchases of 750 to 1,000 metric tons.
UBS set a gold price forecast of $4,600 per ounce by December 2026, rising to $5,000 by March 2027, $5,200 by June 2027 and $5,400 by September 2027, compared with a spot price of $4,312 as of September 17.
Sources: MQL5: Traders' Blogs, Commodities & Futures News
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