Can Gold Extend Gains Despite a Hawkish-Leaning Fed?
The recent Federal Reserve decision to hold interest rates steady with a hawkish tilt has not dampened gold’s advance. Markets interpreted Powell’s emphasis on data dependence and caution about reading too much into a single asset’s move as signalling that policy is not on an imminent path to tighter monetary conditions. This has left real yields subdued and the US dollar under pressure — conditions that typically support gold’s appeal as a non-yielding safe haven.
Beyond monetary policy, multiple structural factors are powering the rally:
Safe-haven demand remains robust amid geopolitical uncertainty and global economic risk aversion.
Central bank buying and retail interest are sustaining elevated demand.
Momentum remains strong with gold breaching record highs around the US$5,600 range.
Some strategists see longer-term objectives well above current levels if allocations increase.
In this context, a “hawkish hold” with no explicit tightening bias has so far been interpreted by markets as neutral rather than restrictive. That real yields and inflation expectations remain supportive keeps the technical and fundamental backdrop tilted toward continued upside.
Conclusion: Gold’s advance has been underpinned more by risk-off flows and structural demand than by simple rate expectations. Therefore, it is plausible that the rally can extend further, provided geopolitical risks, safe-haven demand, and continued dollar weakness persist even in the face of a hawkish-leaning policy stance.
Should You Trim at Highs or Stay Positioned?
This depends on your risk appetite, time horizon, and portfolio context. Both approaches have merit:
Reasons to Stay Positioned (Accumulate or Hold):
Broader narrative intact: Gold’s recent gains reflect deep macro drivers — risk aversion, policy uncertainty, and central bank diversification strategies — not just short-term speculative flows.
Potential further upside: Some institutional forecasts now place 2026 targets well above current levels.
Fed policy remains data dependent, not explicitly restrictive: This leaves some optionality for soft-landing or eventual easing scenarios that support gold.
Reasons to Consider Trimming Near Current Levels:
Parabolic price structure: The rally has been steep, and technical indicators point to overbought conditions, increasing the risk of near-term consolidation or pullbacks.
Profit realisation at extremes: In extended rallies, reducing exposure near all-time highs can lock in gains and reduce drawdown risk.
Volatility around macro releases: Upcoming data points and policy commentary could trigger sharp reversals if risk sentiment improves or the dollar strengthens.
Practical Positioning Framework:
If you are long for the medium to long term: Maintain a core position and consider incremental accumulation on pullbacks rather than outright trimming at extremes.
If you are near term or tactical: Partial profit taking at historic highs can be prudent, with re-entry on consolidations or confirmed technical support levels.
This balanced approach helps preserve gains while keeping optionality open for further upside should macro conditions continue to favour gold.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
