Gold Prices Enter Critical Week, Prepare for Volatility!

Gold prices are expected to remain under pressure this week due to rising US interest rate expectations and the strengthening US dollar. A number of important data releases this week could also shake gold prices.

However, buying activity in the US$4,200-US$4,300 per troy ounce range suggests that selling pressure is beginning to subside. According to Refinitiv, gold prices at the close of last week’s trading on Friday (25/09/2026) stood at US$4,286.25 per troy ounce, a slight increase of 0.19%. Nevertheless, over the course of the week, gold prices fell by 2.07%.

As of Monday (28/09/2026) at 06:30 WIB, gold prices weakened by 0.51% to US$4,264.6 per troy ounce. The strengthening US dollar and the 10-year US Treasury yield breaching 5% have acted as weights on gold prices. Market attention is now focused on US inflation and labour data, which will determine the direction of the Federal Reserve’s next policy.

Gold prices surged towards US$4,700 at the end of August before sharply reversing and falling below US$4,300. Nonetheless, over the last three weeks, selling pressure has not been able to drive prices deeper. The US$4,200-US$4,300 zone is now serving as a critical support area for buyers.

The gold correction occurred after the Fed raised interest rates by 25 basis points to 3.75%-4.00% on 16 September 2026, the first increase since 2023. The Fed also signalled the possibility of further hikes this year. High interest rates increase the opportunity cost of holding non-yielding gold, while a stronger dollar and rising bond yields also make gold less attractive.

Many important data points will shadow gold this week. The market will closely examine the US August Personal Consumption Expenditures (PCE) price index, scheduled for release on Wednesday (30/09/2026). US inflation remains above the Fed’s 2% target; August CPI inflation was recorded at 3.4% annually, while core inflation reached 2.4%.

If PCE inflation is higher than expected, expectations for further monetary tightening could strengthen. This condition has the potential to boost the US dollar and bond yields, simultaneously weighing on gold. Conversely, lower inflation could ease pressure on yields and open room for a gold price recovery. The market will also scrutinise annual revisions to US economic data released alongside the PCE report.

The September non-farm payrolls report, scheduled for release on 2 October, will be the next test. In August, the US economy created 162,000 new jobs, while the unemployment rate held at 4.1%. Average hourly wages rose by 0.3% monthly and 3.1% annually.

Strong labour data could reinforce expectations for further interest rate hikes. Conversely, a weakening labour market could reduce the pressure on the Fed to continue tightening policy.

Geopolitical uncertainty remains a pillar for gold demand as a safe-haven asset. US-Iran tensions and the potential for new conflicts could increase interest in gold, whereas diplomatic progress could reduce the geopolitical risk premium. Physical demand from China also has the potential to support prices, though this may not be sufficient to trigger a major rally while global monetary conditions remain tight.

Technically, gold’s ability to hold the US$4,200-US$4,300 zone will determine its next direction. If prices can hold, the correction may lose momentum, and the long-term bullish trend could be maintained. However, if prices break convincingly below this zone, the risk of a deeper decline will increase, especially if the US dollar and bond yields continue to strengthen.

With US PCE inflation and employment data being released within a few days, gold volatility is likely to increase. The next direction will depend heavily on whether US economic data reinforces or dampens expectations for Fed rate hikes. Bullion analysts believe this combination of factors will test market sentiment, particularly during a shorter trading week due to holidays.

While gold may consolidate at high levels until the end of 2026, prices are projected to strengthen again in the first half of 2027. In its research report, ICICI Bank estimates that gold prices could reach US$4,600-US$5,000 per troy ounce in the first half of 2027. This projection is supported by the potential easing of US real bond yields and a weakening US dollar, which have been weighing on gold.

Similarly, silver prices have also weakened. According to Refinitiv, silver prices at the close of last week’s trading on Friday (25/09/2026) were at US$64.21 per troy ounce, up 0.59%. However, over the week, silver fell by 2.95%. As of Monday (28/09/2026) at 06:30 WIB, silver prices plummeted 0.74% to US$63.8 per troy ounce.