Invest in gold as Fed keeps rates unchanged

Over the past two months, gold prices have traded within a wide range between $4,000 and $4,400 per troy ounce. They have recently consolidated near the lower boundary of the channel. What does this tell us? Bears are still strong, but bulls appear ready to seize the initiative around these levels, as evidenced by steady demand. Buyers continue to prevent any attempts to settle below the critical threshold by stepping in on drawdowns.

The Federal Reserve (Fed) meeting on July 29 was a crucial event for the precious metals market. The outcome was widely expected: no changes. Interest rates remained in the 3.50%–3.75% range. Explaining its decision, the US central bank pointed to a resilient economy and a robust labor market, even though inflation readings are still above the 2% target. So, what are we left with? For now, the regulator sees no reason to soften its stance, leaving the door open to a more hawkish turn and tighter monetary policy if consumer prices run wild.

Despite a formally tough tone of the decision, the press conference offered little clarity on the Fed’s next steps. The Chair reaffirmed the central bank’s commitment to fighting inflation but provided no clear guidance on the conditions under which borrowing costs might be hiked at the September meeting. The lack of an obvious signal on September tightening prompted a modest pullback in expectations for an imminent rate increase. As a result, the dollar weakened, giving gold a boost and briefly pushing it above $4,100 per troy ounce. At the same time, elevated long-term bond yields remain a headwind, as they make interest-bearing assets more attractive compared to the precious metal, which generates no income.

Looking ahead, bullion prices will largely depend on US macroeconomic data. Softer inflation readings could reduce the odds of another rate hike and provide further support for the precious metal.

The ultimate recommendation is to buy gold at the current price of $4,040, targeting $4,200 within one week. For better risk management, place a Stop Loss order at $4,000.