Gold prices retreat ahead of the Federal Reserve decision amid rate hike expectations and geopolitical risks

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智通财经2026/10/28 06:06

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On Wednesday during the Asian session, gold retreated from its weekly high of approximately $4,070, ending a two-day rally. As of 13:35, it had once fallen by 0.68% to around $4,033. With the Federal Reserve about to announce its policy decision, markets widely expect rates to remain unchanged, shifting the focus to the post-meeting statement and Chair Waller's press conference.
The US preliminary Q3 GDP and PCE price index, due for release on Thursday, may offer further clues on the Federal Reserve’s future policy path and impact the short-term performance of the US dollar and gold, a non-yielding asset. According to CME’s FedWatch tool, traders currently price in over an 80% probability that the Federal Reserve will hike rates again in December. Inflation concerns driven by high energy prices also support expectations of further tightening, limiting gold price upside.
BNY Markets strategists agree with market pricing, expecting the Federal Reserve to hold rates steady this week and keep tightening expectations for December. They also caution that at least one dissenting vote in favor of a rate hike is possible; should there be one or two dissenters, markets may interpret Wednesday’s decision as hawkish, bolstering year-end hike expectations. The institution also believes Waller is unlikely to preannounce a December rate hike, as he tends not to offer forward guidance on future policy paths.
Geopolitical risk premiums remain in play. The Wall Street Journal reported Tuesday that the US has informed several Gulf Arab states of plans to launch a brief but intense military operation against Iran after the November 3 midterm elections. Iran-backed Houthi forces claimed to have directly hit Saudi Arabia’s defense ministry in Riyadh with ballistic missiles. US-Iran talks remain deadlocked, driving another round of crude oil gains and helping the safe-haven US dollar hold at two-week highs, further pressuring gold prices.
Nevertheless, gold is still holding well above the three-month low hit earlier this week, warranting caution from aggressive bears. Overall fundamentals indicate that the path of least resistance for precious metals remains downward, with any rebound more likely to encounter selling pressure.

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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Gold prices retreat ahead of the Federal Reserve decision amid rate hike expectations and geopolitical risks

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