Fed Hikes to Slow, Rather than Derail, the Gold Rally

We maintain our $5,400/toz end-2027 forecast despite yesterday's Fed hike and our economists now expecting an additional hike in October. While higher rates should continue to weigh on gold prices through ETF demand in the near term, our economists expect the Fed to deliver three cuts between September 2027 and March 2028, leaving the terminal forecast unchanged at 3.25-3.5%. We therefore expect the impact of tighter monetary policy to be felt primarily through a slower near-term appreciation path rather than a lower terminal gold price. We nevertheless continue to expect gold prices to grind higher in the near term and now estimate year-end fair value at $4,650/toz (below our previous $4,900/toz forecast but above the current spot price of ~$4,350/toz), as much of the expected tightening already appears priced into ETF demand, stronger-than-expected central bank purchases continue to offset the remaining drag from higher rates, and call-option demand for gold as a macro-policy hedge h