Hawkish Fed Drives Gold Down 4% to One-Month Low

The Fed kept its benchmark interest rate unchanged at 3.50%-3.75% and revised its 2026 US Personal Consumption Expenditures (PCE) inflation forecast higher to 2.7% from 2.4% previously, indicating only one rate cut for 2026. Fed Chair Jerome Powell struck a hawkish tone, warning that elevated inflation reflects goods prices boosted by tariffs and higher energy costs, and stated the Fed requires progress on inflation before cutting rates.

This backdrop lifted US Treasury yields and strengthened the US Dollar, as traders scaled back Fed rate-cut expectations. Rising Oil prices also supported the Greenback, further weighing on Gold.

Geopolitical tensions in the Middle East, including Iranian strikes on energy infrastructure, escalated oil prices and triggered fresh inflation concerns, but did not provide traditional safe-haven support for Gold against the hawkish Fed. Technically, Gold broke below the $5,000 psychological level and the 50-day Simple Moving Average at $4,976, accelerating its decline towards the 100-day SMA around $4,600, with momentum indicators reinforcing a bearish outlook.