Insights 
VT 
Gold Price Projections
Gold prices have surged to new all-time highs. This trend has been supported by dovish positioning ahead of the Federal Open Market Committee (FOMC) decision. The increases followed a US CPI report and higher-than-expected initial jobless claims. However, the spike in claims was largely due to fraudulent attempts.
Labour market data still indicates strength, as falling continuing claims suggest potential improvement. Without bearish triggers, the bullish sentiment may persist until the FOMC decision or a new market catalyst. Falling real yields and the Fed’s likely dovish response contribute to the long-term uptrend. In contrast, hawkish interest rate expectations could prompt short-term corrections.
On a daily timeframe, gold’s upward rally remains robust, with buyers eyeing a target around a major trendline at the 3,400 level. Sellers may await a break lower to aim for a drop to the 3,120 level. On a 4-hour timeframe, minor upward trends bolster bullish momentum, with sellers poised to challenge this at the 3,400 level.
The 1-hour chart shows price consolidation above the recent highs, offering minor support. Buyers are likely to continue supporting prices around the 3,675 level, while sellers aim for declines to the 3,620 support. Upcoming data, including US Retail Sales, the FOMC announcement, and jobless claims figures, may influence market movements.
Market Expectations
Gold is pushing new highs as we head into tomorrow’s FOMC meeting. The market is positioned for a dovish hold, especially after the August 2025 CPI report showed core inflation cooling to 2.8%. We see this reflected in fed funds futures, which are currently pricing in a more than 90% probability of the Fed keeping rates unchanged.
However, we must not ignore signs of economic strength that could lead to a surprise. The fraudulent jobless claims from Texas masked a still-tight labor market, and today’s retail sales report for August 2025 came in stronger than expected at +0.5%. This creates a real risk that the Fed’s statement could be more hawkish than the market anticipates.
This divergence between dovish expectations and strong data suggests volatility is underpriced for gold derivatives. Traders should consider buying options strategies like straddles or strangles ahead of the announcement to profit from a large price move in either direction. Implied volatility on near-term options has crept up to 18%, but that could look cheap if the Fed delivers a surprise.
For those leaning bullish, long call positions or call spreads targeting levels above the current highs seem logical. If the Fed confirms the dovish narrative, we could see a quick move towards the $3,750-$3,800 range. The major trendline support around $3,400 provides a clear area to define risk for longer-term bullish plays.
Conversely, the risk of a hawkish pullback is significant, reminding us of the market’s over-eagerness for a pivot back in late 2023. A break below the $3,675 level could be a trigger to buy put options, with an initial target near the $3,620 support. A surprisingly firm stance from the Fed could easily unwind recent gains and send gold back towards that $3,400 trendline.
The key will be to look past the headline rate decision and focus on the Fed’s language and economic projections tomorrow. The fraudulent claims data serves as a reminder that initial reports can be misleading. We should be prepared for the Fed to emphasize that their fight against inflation is not over, despite recent progress.
