Financial Executive: Expectations for Fed Rate Hike Peak + U.S. Treasury Reassessing Gold Reserves May Trigger a Surge in Gold Prices

Fxnews October 15th—— After the pressure from interest rates, the downside risk for gold prices has basically been released. Peter Kinsella, Head of the UK at Union Bancaire Privée (UBP), noted that with easing Middle East tensions and peaked rate hike expectations, together with continued central bank accumulation globally, gold prices enjoy strong bottom support. In addition, if the US Treasury reevaluates its more than 8,000 tons of gold reserves, it could spark a new wave of “currency depreciation trades,” making any deep correction a potentially excellent allocation opportunity for gold.

In the recent volatile international financial markets, every fluctuation in gold prices has affected scores of investors.

Gold, having suffered significant pressure from surging US Treasury yields, seems to have quietly weathered its most challenging period. Peter Kinsella, UK Head of Investment Services at Union Bancaire Privée (UBP), released his latest assessment recently, throwing a bombshell into the market. He asserted that as the Middle East situation clarifies and rate hike expectations peak, the US Treasury itself will inject robust upward momentum into gold prices before the end of the year. This forward-looking perspective has quickly become the focus within the financial sphere.

US Treasury Yields Rise, Yet Gold Shows Remarkable Resilience

Since the Federal Reserve raised interest rates by 25 basis points in September, the gold market indeed encountered a noticeable cooling-off and correction. However, Kinsella keenly observed that amidst the immense macro backdrop of surging nominal rates and inflation-adjusted real rates, gold’s decline has been unusually restrained and mild. The yield on the US 10-year Treasury jumped to a high of 5.30%, while the 10-year TIPS yield, representing market expectations for real rates, also broke out strongly and surged toward the historic 3% mark.

He further pointed out that, based solely on traditional financial pricing models, such a high-pressure interest rate environment should have dealt a devastating blow to gold, triggering a sharp plunge. However, the actual market response was only a limited pullback. This highly abnormal phenomenon deeply reveals one core fact: . From August to early September, during this lengthy window, even though US Treasury yields soared, capital inflows showed unimaginable resilience. Retail investors continued increasing positions in gold ETFs, and institutional investors were persistently adding to net long positions in the futures market. These funds, historically extremely sensitive to rate changes, have made virtually no apparent retreat in the face of surging long-term rates, indicating the downside risk for gold driven by higher rates has been almost entirely released.

Central Bank Gold Purchases Serve as Solid Foundation, Deep Pullbacks Are Opportunities

On the strategic reserves front globally, the continuous entry of official funds acts as an unbreakable defense, firmly underpinning the value core of the gold market. Kinsella specifically mentioned that in the global gold map for 2026, central banks in major Asian nations will again rank at the top among official buyers. Although the range of central banks expanding gold reserves narrowed this year, it does not indicate a waning official appetite for accumulation. Essentially, it's just a phase driven by cost considerations due to surging gold prices.

The latest detailed survey published by the World Gold Council provides the most intuitive data supporting this macro trend. The report shows a record proportion of central banks clearly express plans to further increase their gold reserves in the coming year. This means that whenever sharp sell-offs occur due to emotional market capitulation, central bank-level dip buying inevitably steps in, providing the strongest possible bottom support for prices. This steady official demand across cycles is irreversibly reshaping the long-term pricing logic of gold as a core safe-haven asset.

US Treasury Reevaluation Outlook Emerges, Fed Path Is Key Variable

From a short-term trading perspective, UBP expects gold prices to temporarily consolidate in a relatively narrow range. The market has already priced in, or even overestimated, the pessimism regarding upcoming rate hikes, while the recent temporary rebound in the US core inflation is largely attributed to one-off short-term factors. This, in turn, gives the Fed abundant policy flexibility to slow down or even pause rate hikes once Middle East geopolitical risks are fully resolved.

Kinsella highlighted a major upside catalyst that is easily underestimated by the market—the strong possibility of the US government revaluating the more than 8,000 tons of gold reserves it holds.

Conclusion

Overall, the current gold market stands at a historic intersection of multiple positive factors. Although gold prices plunged sharply to their lowest intraday levels as the higher-than-expected US September CPI was released, Peter Kinsella’s in-depth analysis cuts through the confusion, revealing the underlying value reconstruction logic for investors.

With the solid support of central bank gold purchases and the crumbling of rate hike expectations, the long-term strategic allocation value of gold is quietly strengthening. Volatile deep corrections may already represent the new starting point for the next major historic opportunity.


Spot Gold Daily Chart Source: Easytong

UTC+8, October 15th, 14:13 – Spot gold quoted at $4,134.59 per ounce