Gold Prices Hit Five-Week Low Before Federal Reserve Decision

Precious metals experienced a multi-week correction in mid-September 2026, with gold prices falling to a five-week low of just above $4,276 per ounce on September 15. The Federal Reserve System drove this volatility as market traders prioritized potential interest rate hikes over traditional safe-haven demand. The selloff was accelerated by a strengthening US dollar and a surge in the 10-year US Treasury yield, which hit 5.02 percent, its highest level since 2007.

Market instability intensified after the Government of Saudi Arabia shut its East-West pipeline following attacks, sparking inflation fears. By September 15, markets priced in a 92 percent probability of a rate hike. Despite the price drop, institutional support remained evident, with gold-backed ETFs seeing $2 billion in inflows over a single week and the Government of China continuing to accumulate gold at a record pace.

Prices rebounded on September 16, with international gold futures rising to approximately $4,380 per troy ounce. This recovery followed a decline in crude oil prices, which eased pressure on the US dollar and lowered Treasury yields. However, uncertainty persisted due to unresolved US-Iran tensions, including reports of explosions on Iran's Qeshm Island and Houthi drone interceptions in Saudi Arabia. Investors now expect the Federal Reserve to raise interest rates by 25 basis points, as inflation has remained above the 2 percent target for 65 consecutive months.