Gold Tumbles Below $4,300 After the Fed's Decision
Gold briefly fell after the FOMC voted unanimously to hold rates under new chair Kevin Warsh, but the latest projections revealed 9 of 19 policymakers now expect a rate hike in 2026
Gold prices briefly fell below the $4,300 mark on Wednesday after the Federal Reserve's rate decision revealed a sharp hawkish undercurrent beneath a surface of unanimity.
The Federal Open Market Committee voted 12-0 to keep the federal funds rate at 3.5% to 3.75%, a largely expected outcome. The unanimous tally included notable participation from Stephen Miran, Trump's second-term appointee who had dissented in favor of cuts at every prior meeting since joining the FOMC. Newly installed chair Kevin Warsh presided over his first vote.
Spot gold fell immediately after the public announcement, as commodity and metal traders digested not the decision itself, but rather the economic projections that accompanied it.
The Fed's Summary of Economic Projections delivered the real jolt. It said nine of nineteen policymakers now see a rate hike as warranted before the end of this year. That marks a dramatic reversal from previous March projections, when not a single official penciled in higher rates. Six of those nine believe one quarter-point increase won't be enough to steer inflation back to the 2% target.
Eight policymakers expect rates to stay unchanged for quite some time, while just one projected a single rate cut.
The statement itself struck a cautious tone, citing "elevated uncertainty" linked to the Middle East conflict while acknowledging that inflation is still pretty high compared to the Committee's 2 percent objective.
With nearly half the committee now openly "believing" in the possibility of higher rates, the gold market faces a stiffening headwind. Higher-for-longer, or potentially higher-still, rates erode the appeal of non-yielding assets like bullion. Wednesday's selloff may be just the opening act. Let's see what happens next.