Williams caps 2027 hikes — and physical demand absorbs the algo selling

Gold stopped falling on Wednesday morning, and a Bloomberg report carried by Moneyweb offers two reasons why: one from the Federal Reserve, and one from the way the metal is actually being bought and sold.

The price

Spot gold rose 0.1% to $4,163.82 an ounce as of 11:35 a.m. in Singapore, and silver was 0.1% higher at $59.20, Bloomberg reports. Gold had fallen 0.8% over the previous two sessions. The Bloomberg Dollar Spot Index was 0.1% lower.

Williams draws a line under 2027

The Fed news came from New York Fed president John Williams, who Bloomberg says sees one more interest-rate hike as appropriate this year. Bloomberg’s report adds that further tightening will not be necessary in 2027, and FXStreet reports that Williams does not foresee additional rate increases in 2027; Reuters’ account mentions only the hike this year. Treasury yields edged lower on the remarks, and gold traded near $4,170 afterwards.

Why would a Fed official calling for another hike help gold? Because the market already expected that hike — swaps traders see a low chance of a move in October but roughly 90% odds of a December increase, Bloomberg says. What was not settled was how long the hiking would go on. Putting a limit on it lowers the expected path of rates over the next year, and it is that whole path, not one meeting, that sets what investors give up by holding gold instead of bonds. We explain that trade-off in Can gold rally while the Fed is still hiking?.

Physical buyers vs the algorithms

The second explanation comes from Daniel Ghali, head of metals research at Deutsche Bank, quoted by Bloomberg. Gold’s price action has been muted, he says, despite large-scale selling by trend-following funds. He points to “robust physical demand for gold, with non-commercial and commercial flows working together to offset algo sales and retail now on the sidelines.”

That fits a pattern we have seen all month. Trend-following funds sell as prices fall and buy as they rise — see ETF inflows and CTA covering. When their selling meets steady buyers who are less sensitive to the short-term trend — physical purchasers, central banks, ETF investors — the price stops falling even without good news.

The other side of the ledger

Not everything was helpful. Brent crude stayed above $106 a barrel on the risk of attacks in the Middle East, Bloomberg reports — and higher oil keeps inflation, and the case for that December hike, alive. A softer dollar helped, but the next real test is the September CPI print at 12:30 GMT, covered in Gold holds $4,159 into CPI.

Every figure here is as reported by the publications listed under Sources, at the time they reported it. Prices move; the live gold price has the current one. Nothing on this page is investment advice.