Why $4,600 Gold Is Holding Up Even as Rate-Hike Odds Climb

• Gold fell 1.4% on August 26, its steepest one-day drop in a week, then rose 0.4% to $4,607.90 on August 27 as a weaker dollar supported bullion ahead of Fed Chair Kevin Warsh's Jackson Hole speech.
• Goldman Sachs on June 19 cut its year-end 2026 gold target to $4,900 under a no-rate-cut scenario, while a Fed hike could push gold toward $4,400, defining $500 of downside from its base case.
• CME pricing on August 28 put the probability of a Fed hike at 33% in September and 74.2% by December, making rate repricing the main near-term risk to non-yielding gold.
• World Gold Council data published July 30 showed central banks bought 289 tonnes in Q2 2026, five times Q1 levels and a second-quarter record, while 2025 bar and coin demand reached a 12-year high of 1,374 tonnes.
• Gold traded near $4,604 on August 28, making $4,600 the immediate test: holding above it supports a contrarian entry toward the $4,900 base case, while a sustained break below would strengthen the hawkish risk.

Fed Rate Risk at Jackson Hole Pressures Gold, but Demand Preserves Contrarian Setup 

Spot gold fell 1.4% before recovering 0.4% to $4,607.90 as a weaker dollar supported bullion. December futures rose 0.2% to $4,664, while spot gold remained within 2% of its $4,696.18 three-month high after US Treasury support for long-duration bonds weakened the dollar.

The pullback reflects higher rate expectations rather than weaker gold demand, preserving the contrarian case while prices remain near recent highs. Bob Haberkorn, Senior Market Strategist at StoneX, said ETF demand remains a key source of support, while central banks bought 289 tonnes in Q2 2026, reinforcing the demand base behind the rally.

Treasury Buybacks Pressure Dollar, Strengthening Gold’s Safe-Haven Case 

The US Treasury's increase in buybacks of older long-dated bonds raised concerns about dollar depreciation, helping gold gain 0.4% as the dollar weakened. The move supports the contrarian case because further dollar weakness would increase the appeal of gold as a store of value.

The Fed remains the main counterweight. PCE inflation held at 3.7%, above the Fed's 2% target, while CME pricing put the probability of a rate hike at 33% in September and 74.2% by December. Higher rate expectations could pressure gold near term, creating a potential entry if Warsh turns hawkish without weakening the underlying demand case.

289-Tonne Central-Bank Buying Supports Gold’s $4,900 Upside Despite Fed Risk

A hawkish Warsh speech could pressure gold near term without ending the broader upside case. Matt Simpson, Senior Analyst at StoneX, said further weakness could attract buyers who missed the first rally and are targeting $5,000. Goldman Sachs's $4,900 year-end base case assumes no Fed cuts in 2026, while a rate hike could push gold toward $4,400, creating a $500 downside range. 

With CME pricing a 74.2% probability of a hike by December, the next inflation data will test whether a pullback strengthens the contrarian entry or shifts gold toward the bear case.

12-Year High Retail Demand Keeps Gold’s Physical Buying Case Intact 

Bar and coin demand reached a 12-year high in 2025 despite record gold prices, showing that physical buying remained resilient as bullion appreciated. The World Gold Council launched its Gold Dealer Assurance Standard to address trust, which it identifies as a key barrier to retail ownership. 

David Tait, CEO of the World Gold Council, said stronger trust is essential to sustaining demand. A hold above $4,600 alongside firm physical buying would keep the contrarian case intact, while a break below that level would weaken the near-term setup.

Where Gold Goes From Here

Gold holding near $4,600 to $4,700 despite a 74.2% implied probability of a December rate hike shows demand is absorbing a more hawkish Fed outlook. A close below $4,600 combined with hike odds above 80% would weaken the contrarian setup and bring Goldman Sachs's $4,400 bear case closer into view. 

Watch FedWatch pricing and the next PCE release: stable hike odds near 74% support the $4,900 base case, while a move above 80% alongside weaker gold would signal rising downside risk.