Gold is down more than 21%. Where could prices go in September?

Gold has fallen sharply from its record high, but the decline does not offer a clear answer about where prices will go next. After reaching $5,589.38 per ounce on Jan. 28, the metal lost ground over the following months, despite several short recoveries.

On Sept. 1, gold stood at $4,369.19 per ounce, 21.8% below its peak. The path down has not been steady. Prices regained ground at points, including during a strong run in August, before retreating again as expectations for the economic outlook changed.

Interest rates could provide one of the most important signals this month. Federal Reserve rate expectations shifted late in August after Federal Reserve Chair Kevin Warsh said more action might be needed if inflation did not move convincingly toward the Fed’s 2% target. Investors then raised their expectations for a September rate hike, and gold fell about 3% on Aug. 28.

Higher rates can weigh on gold because the metal does not pay interest. Bonds, certificates of deposit and high-yield savings accounts can become more appealing when rates rise, potentially reducing demand for gold. The article says, however, that there is no reliable way to predict where the price will finish the month, and the forces pushing prices in either direction remain active.

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More action could be needed if inflation doesn't move convincingly toward the Fed's 2% target.