① The Federal Reserve will announce its latest interest-rate decision in the early hours of Thursday, Beijing time, with the market widely expecting a 25-basis-point hike; ② Precious-metals analyst Jesse Colombo forecasts that if the Fed raises rates, gold could stage a modest rebound, while a hold would likely push prices toward $5,000.
The Federal Reserve is set to announce its latest interest-rate decision in the early hours of Thursday, Beijing time, with markets widely expecting a 25-basis-point hike. Independent precious-metals analyst and founder of BubbleBubble Report, Jesse Colombo, predicts that gold is likely to continue rising regardless of whether the Fed ultimately raises rates.
Specifically, Colombo expects that if the Federal Reserve raises interest rates by 25 basis points as anticipated, gold prices could stage a modest rebound as persistent uncertainty dissipates. However, should the Fed defy market expectations and vote to keep rates unchanged, gold prices could surge sharply and begin to challenge the $5,000 per ounce level.
Colombo believes that investors had been overly bearish on gold ahead of last Friday's release of the August Consumer Price Index (CPI), putting downward pressure on prices. He noted that the market had initially feared a "very hot" CPI reading, prompting a sharp sell-off in gold; however, while the actual figure came in slightly above expectations, it fell short of the most pessimistic scenarios, triggering a brief, relief‑driven rebound in gold prices.
"However, after an earlier overextended decline, gold prices quickly entered overbought territory and then retraced over the following hours—this is a typical technical correction," he added.
Colombo specifically noted that spot gold rebounded after the CPI release, briefly approaching the $4,400 per ounce resistance level. He added that $4,400 has played an exceptionally pivotal role over the past year: it served as a key support in February and again in late March, only to be breached in June. Throughout the year, it has consistently acted as both a significant support and resistance level, and it continues to carry substantial psychological weight.
"It briefly dipped below $4,300 on the daily chart but failed to sustain a close below that level, which is seen as a positive signal," he added.
What are the implications of the Federal Reserve's decision?
Overall, Colombo believes that the market has already fully priced in expectations of rate hikes for several months, so Wednesday's decision is unlikely to deliver any real surprises. The current speculation over whether or not rates will be raised is largely just market noise. In his view, the Fed has been "slow to react" and should raise rates by 25 to 50 basis points—after all, further cuts could always follow.
He explained that, although current inflation is largely driven by supply shocks—such as the Iran war, which has pushed energy prices to record highs—other major factors are also at play. In any case, the Federal Reserve will inevitably have to respond sooner or later.
"In addition, there is another factor: AI-driven inflation. Ultra-large-scale data center operators are spending trillions of dollars, pushing up the prices of chips, computer components, electronic products, and construction materials used to build data centers. This, too, is a major driver of inflation—something that monetary policy can help address," he added.
Colombo draws a parallel between the current data-center boom and the real-estate market of two decades ago: "During the housing bubble, construction activity surged, driving up copper prices and the costs of various raw materials, which ultimately showed up in inflation figures. Subsequently, the Federal Reserve raised interest rates, bringing that bubble to an end. Therefore, this type of inflation can be addressed through monetary policy."
As for the impact of the Federal Reserve's decision on gold prices, Colombo said that if the Fed raises interest rates, he expects gold prices to rise modestly; if the Fed holds rates steady, gold prices are likely to surge.
"Ultimately, I'd like to see gold's daily close firmly above $4,400, ideally accompanied by a significant surge in futures trading volume, with ETFs and mining stocks also seeing synchronized volume spikes. That would signal institutional capital is backing this rally," he said. "If that holds true, I expect gold prices to head toward $5,000 in the coming months and could even break the highs reached in late August."