Rates Rose Twice: 5 Reasons Gold Stayed Strong

Gold is trading near $4,349 and silver around $66.22 today. The Federal Reserve raised rates on September 16 and the Bank of Japan followed with its own hike on September 18. Standard economics suggests higher interest rates should weigh on gold, since the metal provides no yield. Yet within hours of those moves, five separate developments emerged that point in the opposite direction. Below are those signals and the mechanisms that connect them to gold’s outlook.

Is Goldman Sachs Still Bullish on Gold After This Week’s Fed Hike?

Yes. Goldman Sachs has kept its end-2027 gold forecast at $5,400 an ounce, even after the Fed’s 25-basis-point hike to 3.75%-4.00% and its updated expectation for another increase in October. Conventional logic would lower a long-term gold target when rates rise, but Goldman’s model identifies offsetting forces. It sees central banks buying roughly 91 tonnes of gold per month and notes that call-option demand for gold is running at about three times its historical average. Those two trends help counteract the higher-cost-of-carry effect from rising rates. Goldman did reduce its near-term 2026 fair value to $4,650 from $4,900, but left the long-term target unchanged: a slower climb, same destination.

Why Does David Einhorn Think Gold Will Beat the Nasdaq Over the Next Five Years?

David Einhorn of Greenlight Capital told Morgan Stanley he expects gold to “significantly outperform” the Nasdaq over the next three to five years. His argument rests on three trends moving in different directions: expansive U.S. fiscal policy, continuing de-dollarization among some nations, and the precedent set by the West’s 2022 freezing of Russia’s FX reserves. That episode raised a governance question for other countries: how reliable is a reserve held in a foreign jurisdiction if it can be restricted by political action? On the flip side, Einhorn sees Big Tech shifting toward heavier capital spending—driven by AI investments—which may compress the high profit margins that have underpinned the Nasdaq’s returns. Historical episodes show that weakening faith in the dollar’s reserve role often coincides with rising gold prices. Einhorn is betting that dynamic will reassert itself.

Why Is Venezuela Moving $4 Billion in Gold From London to New York?

The issue is custody rather than ownership. Reports indicate Venezuela’s government and opposition are close to an agreement to transfer roughly $4 billion in gold reserves from the Bank of England to the Federal Reserve Bank of New York. The Bank of England has stored that gold since 2019 but declined to recognize the Maduro government’s authority over the reserves. Under the near-term arrangement, Venezuela’s interim government would obtain legal control, though it would not be free to sell the gold immediately; instead it could pledge the metal as collateral for reconstruction loans after a natural disaster. Since 2011, central banks have repatriated more than 2,000 tonnes of gold from foreign vaults. The takeaway is straightforward: when your metal sits in another country’s vault, full control depends on political recognition in that jurisdiction.

Is China Still Buying Gold as It Sheds U.S. Treasuries?

Yes — and those moves are related. China’s holdings of U.S. Treasuries have declined to roughly $618 billion, the lowest level since 2008 and down from about $1.3 trillion in 2013. When reserve managers reduce Treasury exposure, they redeploy capital into other assets. Surveys and market reports show broad expectation for rising gold reserves: the World Gold Council’s central bank survey indicates the majority of central banks plan to expand their gold holdings over the coming year, and regional institutions report increased institutional demand in China, India, and Australia. Selling Treasuries and buying gold can therefore be part of the same strategic reallocation by reserve managers seeking diversification away from dollar assets.

Is Hong Kong Trying to Build Its Own Global Gold Market?

Yes. In his September 16 Policy Address, Hong Kong’s Chief Executive John Lee committed to expanding the city’s role in global gold markets. The plan includes introducing new yuan-denominated, physically settled gold futures contracts and exploring growth in the Exchange Fund’s own gold reserves. The structural point matters: a competing clearing and settlement hub shifts physical trading volume away from established centers such as London and New York. Every ounce settled through an alternative hub is effectively priced and recorded outside the traditional dollar-dominated system. That structural shift—changes to custody, clearing, and settlement—links the week’s five signals and hints at how monetary and reserve systems might evolve over time.

---

SOURCES
1. InvestingLive — Goldman Keeps $5,400 Gold Forecast Intact Despite Fed Hike
2. Futu News — Hedge Fund Veteran David Einhorn: “Gold Will Significantly Outperform the Nasdaq”
3. Al Arabiya English (Reuters) — Venezuela Nears Deal to Move $4 Billion in Gold Reserves to New York
4. Mining.com.au — China Cuts US Treasury Holdings as Gold Demand Grows
5. World Gold Council — Central Bank Gold Reserves Survey 2026
6. Caixin Global — Hong Kong to Accelerate Push for International Gold Trading Hub

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Past performance is not indicative of future results. Always consult a qualified financial advisor before making investment decisions.

You May Also Like:

• The Bank of Japan Just Hiked to a 31-Year High. Gold Barely Noticed.
• The Fed Hiked. The Bank of England Held. They Landed on the Same Rate.
• Jobless Claims Just Beat Estimates. Gold Rallied Anyway. Here Are 4 More Signals Behind It.
• Gold and Silver Rip Higher as the Fed-Hike Selloff Reverses
• The Fed Just Hiked. 16 of 18 Officials Say It’s Not Done.
• $603 Million Left the World’s Biggest Gold ETF. It Didn’t Leave Gold.