Despite Powell’s cautious approach, the broader outlook for bullion remains favorable. Gold tends to perform well in low interest rate environments, as reduced yields diminish the opportunity cost of holding the non-yielding asset. Traders are already factoring in additional cuts this year, which could help limit downside risks even in the face of near-term headwinds from a resilient dollar.

On the supply side, gold trade flows also played a role in recent price movements. In August, Swiss exports to the United States plunged 99% after U.S. Customs announced tariffs on imported bars. The White House later reversed course, formalizing exemptions in early September. Meanwhile, Chinese demand surged, with imports climbing from 9.9 tonnes in July to 35 tonnes in August, the highest since May 2024. India also boosted purchases, reinforcing bullion’s global appeal even as Western demand fluctuates.

Analysts point out that gold’s latest rally remains tightly linked to dollar trends. Carsten Fritsch of Commerzbank noted that bullion mirrored the greenback’s swings: a brief spike to record highs above $3,700 immediately after the Fed decision was quickly erased as the dollar regained ground. Internal Fed dynamics also add uncertainty, with new Governor Stephen Miran favoring a deeper 50 basis point cut. His stance, backed by ties to former President Trump, suggests that future leadership changes could push the Fed toward more aggressive easing.

Looking ahead, markets remain divided on the pace of cuts for the rest of 2025. The Fed’s dot plot shows a median expectation of two more reductions this year, though several members see no need for further easing. By 2026, policy direction could shift dramatically, particularly if Trump appoints a new Fed Chair. A pivot to rapid rate cuts, even with lingering inflation risks, would likely propel gold toward fresh highs.

Gold continues to offer a valuable hedge in an uncertain environment. With monetary policy at a crossroads and geopolitical factors influencing trade flows, short-term volatility is inevitable. However, accumulating gold during dips — especially when prices retreat toward the $3,600–$3,630 range — could prove a strategic move. If the Fed confirms additional rate cuts, bullion has strong potential to retest the $3,700 level and possibly push beyond $3,750 by year-end.