Gold continues to rise at an exceptionally rapid rate

The minutes from the Federal Open Market Committee (FOMC) meeting held on September 16-17, which were released last week, suggested a leaning towards a rate cut.

Members of the FOMC largely concurred on the possibility of reducing rates this year but showed caution against making drastic moves. Some expressed concerns about implementing overly restrictive measures, yet they acknowledged the need for patience in future decision making due to the dual challenges they face.

Their two primary objectives are to manage inflation and foster a favorable environment for job creation, indicating that a balanced approach should be prioritized.

Despite various geopolitical issues, in my note from last week, I highlighted that the US government shutdown is a significant factor influencing the market as it enters its second week.

The Trump administration has already begun taking steps by laying off federal employees, with many receiving notifications.

Europe is similarly grappling with unresolved structural challenges, particularly in France, which is facing issues related to public finances and is hampered by policy constraints. The country is also experiencing political instability following the resignation of its Prime Minister, leading to what is described as the worst political crisis France has seen in decades. In Germany, the industrial sector is struggling with growth amid rising energy prices, even as inflation remains high. Meanwhile, the recent minutes from the European Central Bank (ECB) indicate that it is not rushed to lower its benchmark interest rates and plans to postpone any rate cuts.

Italy and Spain are grappling with long-term challenges including slow growth, substantial public debt, and political instability. The economic hurdles are significant and lack clear direction.

In Japan, the currency weakened significantly after the election of Prime Minister Sanae Takaichi, who is perceived as opposing interest rate hikes and advocating for economic growth and job creation. She has emphasized that the Bank of Japan should align its policies with fiscal objectives.

However, the Japanese Yen rebounded following comments from a former official of the Bank of Japan, suggesting that the central bank could manage currency declines in an orderly fashion and might intervene if the depreciation becomes excessive.

The tariff situation is once again making headlines. US President Donald Trump has threatened to impose substantial increases on tariffs for Chinese imports due to the country tightening its regulations on rare earth elements.

He has also hinted at the possibility of canceling his meeting with the Chinese President.

GOLD

Meanwhile, gold continues to rise at an exceptionally rapid rate, with no signs of slowing down. In my September 29 forecast for this newspaper, I projected that gold would reach USD 4,000 by the close of December 2025. Having already reached that mark, I am now adjusting my estimate to between USD 4,200 and USD 4,300 by the end of this calendar year. Geopolitical factors and others significantly support the precious metal’s price increase, but nothing rivals the global Central Bank’s demand for gold.

Until 2010, the global central banks were primarily net sellers of gold. However, they shifted strategies and began accumulating gold for their reserves.

This trend has accelerated over the past decade, largely due to the weakening US Dollar and increased purchases by Central Banks. Countries like China, Russia, Turkey, and India are among the largest buyers.

This shift in Central Bank policy is certainly linked to risk management considerations. While gold is an expensive asset that does not generate returns while held, meaning buyers miss out on potential interest earnings, their advantage arises only during price increases at revaluation. Besides Russia, Iran is another discreet buyer in the market who remains unaccounted for due to sanctions.

This indicates that central banks still possess an appetite for buying that outstrips that of individual and commercial investors, suggesting that gold will continue its upward trend.

At this current rate, gold could reach between $ 5,200 and $ 5,500 by December 2026. A significant correction in gold’s price could occur only if central banks collectively announce plans to sell off their gold reserves.

WEEKLY OUTLOOK — OCT 13-17

GOLD @ USD 4018— We are definitely looking at another week of volatility ahead. I can’t dismiss the possibility of a downward correction. However, only a drop below USD 3945 could drive it down to around USD 3905. On the other hand, if we surpass USD 4060, we may see a push to test the $ 4095-00 range, with the next target price at USD 4140.

EURO @ 1.1620— Euro is supported at 1.1520 and is expected to rise. A breakthrough at 1.1698 could lead to a target of 1.1745-55. Otherwise, it may drop to 1.1470.

GBP @ 1.3360— Pound Sterling has a support at 1.3240, which is expected to hold for 1.3450. A breakthrough could lead to a rise to 1.3490.

JPY @ 151.18— Last week, we experienced significant volatility, and the YEN is now undergoing a correction. Nevertheless, I anticipate that the key support level of 149.50 will hold, leading us to 152.30 or 153.20.

Copyright Business Recorder, 2025