Gold prices and interest rates: What to watch this week

The price of gold has surpassed so many records in the past year or so that it’s arguably become commonplace at this point in 2025. Starting at just $2,063.73 per ounce in January 2024, the price of gold as of May 6, 2025, is now $3,396.43 for that same amount. Or, described another way, the price of gold has soared by around 65% in less than 18 months. That makes it one of the fastest-growing assets to invest in right now, particularly considering that gold prices tend to only move upward over time (accounting for minor fluctuations and declines).

But while gold’s price changes daily, prospective investors and those who have already added the precious metal to their portfolios may be particularly interested in the potential for the price to change this week. With the Federal Reserve set to meet for the first time since March and with an announcement on the future of the federal funds rate set to be released on Wednesday, those in the gold market will be paying close attention. Typically, a rise in the federal funds rate causes gold prices to rise, while a decline there will cause gold prices to fall. So what, then, will happen to gold prices this week? That’s what we’ll analyze below.

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Gold prices and interest rates: What to watch this week

While it may not be the news those already invested in gold want to hear, the likelihood is that gold prices will remain steady but relatively unchanged this week, at least based on the historic relationship between gold and interest rates. 

That’s because the federal funds rate is unlikely to be reduced, at least according to most economists’ predictions. The CME Group’s FedWatch tool, for example, has the rate remaining at the current level listed at an almost 100% certainty as of May 5. If a rise were more likely, then gold prices would be more inclined to spike. And if a cut was expected, as it looks increasingly likely for the Fed’s meeting in July, then gold prices could decline. With neither action expected this week, then, gold prices are likely to remain around the $3,400 price range they’ve been in recent days.

That noted, gold prices are driven by more than just the Fed’s rate cut actions or lack thereof. Items like inflation, market and economic conditions, geopolitical tensions and more can also impact gold prices, perhaps significantly if one or more of these considerations change dramatically. Understanding this fluidity, then, combined with the likelihood that the Fed won’t alter the current gold price trajectory (for the time being), those considering gold should look to invest promptly, before market conditions inevitably cause the price to rise again, perhaps putting it permanently out of reach for many.

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Will the price of gold hit $4,000 soon?

It wasn’t that long ago that speculation was high over gold hitting the $3,000 per ounce milestone record. But that happened in March. Now, however, all eyes have turned toward the precious metal breaking the $4,000 price point. And while no one knows for sure when that could happen, or what market conditions will need to combine to motivate that surge, it looks more likely now than most could have imagined when gold was barely over $2,000 per ounce in early 2024.

“Gold prices can absolutely reach $4,000 per ounce if economic uncertainty and large market sell-offs continue,” Ben Nadelstein, head of content at Monetary Metals, recently told CBS News. “Interest rates falling back towards zero could also propel gold prices past the $4,000 per ounce mark as investors move out of dollars and into something that can still deliver a real yield.”

Understanding this reality, investors considering the hedge against inflation and portfolio diversification that gold can provide should strongly look to get started now, before the price rises again. And they should explore ways to invest in the metal without having to pay today’s top costs (like with fractional gold, for example). Waiting for a decline in the price, however, could be problematic, considering that it’s unlikely to decline in a material way.

The bottom line

The historical relationship between gold and interest rates indicates that gold prices will remain elevated this week, but are unlikely to spike much higher if the federal funds rate stays frozen. Still, with multiple factors driving gold’s price, it wouldn’t be shocking to see gold’s price rise again soon, either. So don’t let predictions on rates and prices cloud your investing judgment. If you know your portfolio could use the help that gold has historically provided, it still makes sense to get invested now.