Gold price: Awaiting for the US inflation to test the Fed's direction

This week, after opening at USD 3,645/oz, gold plummeted to USD 3,626/oz before surging to USD 3,707/oz after the Fed reduced interest rates by 0.25%. However, profit-taking pressure grew as the Fed Chair voiced worry about continuing to lower interest rates, causing the gold price to fall to $3,627/oz before recovering to complete the week at $3,685/oz.

In the Vietnamese gold market, the price of SJC gold bars rose from VND 131.1 million/tael to VND 133 million/tael.

The Fed's Dot Plot indicates that the Fed may cut interest rates twice more this year and once in 2026. However, at a press conference immediately following the FOMC meeting, Fed Chairman Powell emphasized that he does not support unduly aggressive interest rate decreases since inflationary pressures might rise considerably as a result of the Trump administration's tariffs. Following the Fed Chairman's comments, the price of gold fell to $3,627/oz, having previously exceeded $3,700/oz.

However, the Fed's decisions are made with a majority vote. Furthermore, Mr. Powell's term is coming to a conclusion. Meanwhile, President Trump is looking to select his confidants to the Federal Reserve Board of Governors. As a result, the aforementioned comment by Fed Chairman Powell was not as favorably greeted by the market as previously.

Despite this, many analysts anticipate gold prices will continue to drop and stabilize before rising sharply again, as investors closely follow US economic statistics, US-China trade discussions, geopolitical tensions between NATO and Russia, and Middle Eastern crises.

Mr. Philippe Gijsels, Chief Strategist at BNP Paribas Fortis, claimed that gold prices are unlikely to fall dramatically in the near future because the Fed has resumed its monetary easing cycle. Furthermore, with the global economic situation as unpredictable as it is, gold purchasing activity will be high when prices fall. Although gold prices appear to have risen too quickly and too strongly, up about 40% in the first nine months of this year, we are still in the early phases of this bull market.

"Due to all the global instability, there is still significant room for gold prices to rise, and it is not out of the question that gold prices will increase to $4,000/oz by the end of this year or early 2026," said Philippe Gijsels, a commodities economist.
Next week, the United States will disclose some key economic statistics, including the August PCE index, the Fed's favored inflation metric. If PCE goes far over 3% compared to the same period last year, the Fed will almost probably delay interest rate decreases in October, placing downward pressure on gold prices next week. In contrast, if PCE rises by only 2.9% or less, the Fed will be able to continue decreasing interest rates, which will boost gold prices next week.

According to technical analysis, the price of gold remains overbought. However, trend lines such as ADX continue to support the medium-term rising momentum of gold prices. As a result, the price of gold will go sidways, providing opportunities for investors to acquire. If gold price do not rise over $3,708/oz next week, it will fall fast to $3,626/oz. If this level cannot be sustained, the gold price might fall below $3,590/oz (MA100) or lower. However, if it surpasses $3,708, it might soar to $3,750/oz next week.