Gold Traders See a Fed Pause Brewing, but the Metal Can't Turn It Into a Rally

Gold got a measure of relief on Monday from the growing conviction that the Federal Reserve will stand pat at its next meeting — yet the metal finished the session slightly lower, a reminder that softer rate jitters alone are not enough to power a sustained advance.

The spot price settled at USD 4,164.82 per troy ounce, a daily move of -0.1%, after trading as high as USD 4,184.90 earlier in the session. That early firmness in Asian hours came despite stubbornly elevated expectations for further US rate hikes, with traders pricing a 16% chance of an October move and 92% odds of one in December, according to Reuters.

Warsh Says Nothing, Markets Hear Everything

The shift in near-term sentiment traces back to Fed Chair Kevin Warsh, who offered no steer on the next rate decision during Friday's IMF-World Bank annual meetings in Bangkok. Markets nonetheless read his reticence as an argument against an imminent increase, and Bloomberg reported that expectations for a hike fell after his remarks.

The numbers tell the story of a repricing in timing rather than direction. CME FedWatch put the probability of an October hike at 15%, while the December figure stood at just under 89%, the Wall Street Journal reported. In other words, the relief is about when the next step comes — not whether it comes at all.

That distinction matters when sizing up gold's move. An expected pause is neither a promised pause nor a signal of easing, and Warsh's speech contained no such commitment. Traders have adjusted their bets; the Fed has not pre-empted its own decision.

Import Prices Throw Cold Water

Complicating the picture, Reuters pointed to stronger-than-expected US import prices for September, which underscore persistent price pressure and dim hopes for a less restrictive monetary stance. The modest gain in gold therefore sits alongside a still-cautious read on the rate environment.

Lower oil prices lent a hand, cited by both Reuters and the Wall Street Journal as support for bullion. Pulling in the other direction are geopolitical uncertainty and fiscal strains, which leave the market without a clear heading.

Saxo Bank describes a tug-of-war between short-term selling by macro-oriented traders and demand for safe-haven assets. Two investment horizons are colliding: near-term positioning reacts to the rate outlook, while safety buying is driven by political and financial risk. That clash explains why a friendlier view of the upcoming Fed meeting has not, on its own, marked a turning point.

China's Buying Is Real — and Narrow

Offsetting the rate worry is official-sector demand. The World Gold Council reported Friday that the People's Bank of China added 23 tonnes of gold in September, lifting its official holdings to 2,410 tonnes.

The Chinese picture is not uniform, however. Central-bank purchases and exchange-traded fund inflows came alongside weak wholesale demand, so the buying cannot be read as a broad-based pickup. Chinese gold ETFs took in 11 tonnes in September, pushing their holdings to a record 304 tonnes, while wholesale demand ran 21% below year-earlier levels in the third quarter.

Forecasts Diverge on the Horizon

Bank of America struck a cautious note on Thursday, with analysts forecasting an average price of USD 4,000 per ounce for the fourth quarter of 2026 while flagging difficulties for gold in holding that level over the following three months. That is a projection, not an observed price move — but it signals that restraint persists even after the latest uptick.

ANZ sees limited upside in the near term but expects gold above USD 5,000 per ounce in 2027, a call it ties explicitly to sustained investment and central-bank demand.

The Calendar Takes Over

Attention now shifts to the Fed's October 27–28, 2026 meeting and the PCE inflation data due the following week — September figures land on October 29 — with investors waiting on both to gauge the path of rates, Reuters reported. Current positioning thus hinges on decisions and data still to come.

For investors, the takeaway splits cleanly along time horizons. Near term, the dominant question is whether the Fed actually delivers the pause markets now expect. The longer-run bullish case rests on continued buying. Fading October rate fears may ease the pressure on gold, but they are no substitute for a durable demand base.