Precious metals help us in making money again. How long are they going to continue filling investors’ pockets? What is a potential for some profit taking? How soon might that happen? Here I express only my humble opinion on this highly encouraging issue.

It’s nearly a week left until the widely expected move lower by the US Federal Reserve (Fed). Its Federal Open Market Committee of 19 members (including 12 voting ones), with obvious reluctance, will lower the borrowing costs range conditions in dollars on the FX market from the current 4.25-4.50% to 4.00-4.25%, and possibly even to 3.75-4.25%. The difference in the latter decision could be made by inflation statistics on the consumer price index (CPI), which is scheduled for this Thursday. JPMorgan’s analyst Fabio Bassi noted on Monday that “the bar for a 50bp Fed cut remains high”, mainly due to last Friday’s job data weakness, but the nearest step is likely “to be limited to a quarter-point reduction”, while Fed’s chair Jerome Powell’s dovish tone at Jackson Hole late August “warrants 25bp easing at the September meeting, an insurance rate cut driven by softness in payrolls while inflation is still above target”. Slowing US jobs curve “virtually” rules out keeping rates on hold, at the same time, but “does not justify a deeper cut”. Well, I have carefully scrolled through many of such types of expert comments, and it seems that this point of view is the most typical currently within the global banking system.

However, the traders’ rule of "buying expectations and selling facts" has not been cancelled, it has been working for years. Therefore, a small rate cut will most likely provoke a moderate outflow of money from risk-insurance assets, such as Gold or Silver, and may even immediately follow the decision. Gold futures were running into the then wall of about $3,500 per troy ounce at the beginning of summer, now they have covered a distance of more than $150 in a short period of time to levels above $3,650, and may have the capacity for a sharp breakthrough to $3,750, I say - but this is if rates are suddenly lowered by 50 basis points. And even then, at the slightest approach to $3,750, I would take profit from most of my buys in Gold, since the next rate decision at the very end of October will probably be unchanged or only 25 basis points. Dovish expectations will be fulfilled in September to the maximum, and there will be nothing more to expect, two 50 bp in a row only happens during a severe recession, and the Fed will definitely not be eager to sound the alarm. So, there are few reasons to go on a march to $4,000, frankly speaking.

I wrote back in the spring that Gold was still looking too expensive well above $3,500. And then I was labelled as a temporary Gold sceptics, but at that time it was absolutely true, as Gold prices did not go higher when the Fed was holding a pause till late August. The Wall St flagships gave me much more money since April to July, and later too. Now Gold will have a new and generally higher range, that's all. In case of an ideal decision for the markets of 50 bp on the eve of September 17, I will leave buy positions in XAUUSD open until the final decision of the committee is announced. But I do not expect too much. If at 50 bp there will be the first and powerful jerk upwards (but probably the neatly last one climb like that for the nearest weeks). Therefore, already on the second wave of the rise I plan to take my profits in this scenario and proudly leave, taking off my hat and saying bye-bye to Gold for a while. If 25 bp, i.e. a small step, then a moderate weakening of risk-hedging assets is almost guaranteed, and in this case I will place a delayed order in advance closing my positions slightly below the market price at that time, and I will place this order just before the decision. Because then even some stronger dollar positioning is possible in a couple of days, on taking forex profits ad well, and a correction in Gold to the area below $3,600 may land. So, the $3,500 level seems to be the lower limit of the new normal, that is, a blurred new technical support, and a descent in its direction after a moderately soft Fed still cannot be ruled out. It would be such a pity to miss out on honestly earned money. Taking profit, it would be wiser to hope for a new race on top to buy probably at some $3,550 area later.