Gold drops sharply as hawkish Fed minutes fuel rate hike fears

Gold prices fell sharply on Wednesday as the release of hawkish Federal Reserve meeting minutes, a stronger U.S. dollar, and elevated Treasury yields combined to push the metal to its lowest level in over a week.

Comex gold futures for August delivery dropped more than 2.2%, trading around $4,064 per ounce in midday trading, extending losses that began earlier in the week as investors positioned ahead of the minutes release.thestar+2

Fed Minutes Reinforce Tightening Bias

The Federal Reserve released minutes from its June 16-17 meeting at 2:00 p.m. ET on Wednesday, offering investors their first detailed look at deliberations under new Chair Kevin Warsh. The June meeting held rates steady at 3.50%-3.75% for the fourth consecutive time, but the accompanying projections marked a hawkish pivot.hiringlab+3

The median federal funds rate projection for end-2026 was revised up to 3.8% from 3.4%, implying at least one rate hike before year-end. Half of the 18 responding policymakers indicated they expect higher rates this year, with cuts deferred to 2027 and 2028 as policymakers assess the persistence of inflation driven in part by the Iran conflict's oil-price shock. PNC Economics expects the Fed to remain on hold through the remainder of 2026 and into 2027.cnbc+2

Dollar Strength and Geopolitical Turbulence

The U.S. dollar strengthened in the lead-up to and following the minutes release, making dollar-denominated gold more expensive for international buyers. The 10-year Treasury yield hovered near 4.47% at the start of the week, adding to pressure on the non-yielding metal.cnbc+2

Geopolitical developments further complicated the gold picture. U.S. Central Command completed strikes against more than 80 targets in Iran on July 7 in response to Iranian attacks on commercial vessels in the Strait of Hormuz. The Treasury Department also revoked a sanctions waiver that had permitted international sales of Iranian oil. While such tensions would typically support safe-haven demand for gold, the resulting surge in oil prices reinforced inflation expectations and the case for tighter monetary policy, ultimately weighing on bullion.nytimes+3

Market Context

Gold had briefly recovered to $4,155 per ounce on July 6 after weak June jobs data — just 57,000 payrolls added — dampened rate-hike expectations. But the combination of Wednesday's hawkish minutes and the Iran escalation reversed those gains. The metal remains well below its January highs near $5,600, weighed down throughout 2026 by the shift toward tighter policy under Warsh's leadership.goldsilver+2