Gold retreats after Fed holds rates but signals possible September hike

Gold whipsawed on Wednesday and into Thursday as the Federal Reserve held interest rates steady but sent hawkish signals that tempered an initial rally, leaving the metal caught between relief over no immediate tightening and growing expectations of a September rate hike.

Spot gold surged more than 1.2% to above $4,081 immediately after the Fed announced it would keep the federal funds rate in the 3.50%-to-3.75% range on Wednesday. The move briefly pushed prices as high as $4,116.28 before bullish momentum faded. By Thursday's Asian session, gold had retreated below $4,050 as traders digested the meeting's hawkish undertones.tradingview+2

A Divided Fed

The decision to hold was approved by a 9-3 vote, with three FOMC members dissenting in favor of a 25-basis-point rate hike — a split that underscored rising inflation concerns within the committee. Fed Chair Kevin Warsh reinforced that tone at his press conference, emphasizing that inflation remains too high and that the central bank would not waver in pursuing its 2% target.tradingkey+1

"If inflation continues to be elevated through the forecast period, interest rates could well be part of that solution," Warsh said, according to Gulf News. Markets responded by pricing in roughly a 63%-67% chance of a rate hike in September, up from around 56% a day earlier.tradingview+2

Marex analyst Edward Meir told Analytics Insight that Warsh "seemed kind of disengaged from the need to raise interest rates," a posture that initially supported gold but left traders uncertain about the policy path ahead.analyticsinsight

Geopolitics and Oil Add Complexity

The Fed decision played out against a volatile geopolitical backdrop. Iran launched missiles at a U.S. base in Jordan, prompting U.S. precision strikes against Iran-backed groups in Iraq. Brent crude jumped sharply, with prices near $89-$90 per barrel on Thursday. Rising oil prices feed inflation expectations and, by extension, the case for tighter monetary policy — a dynamic that works against gold's appeal as a non-yielding asset.ad-hoc-news+2

"The combination of the oil price bounce triggering higher yields due to attempted Iranian strikes on US bases overnight and last-minute jitters ahead of the Fed result has put gold under pressure," said independent metals trader Tai Wong.tribune

Key Levels in Focus

Analysts identified $4,020 as the critical near-term support level. A break below it could open the door to further declines toward the $3,950-$3,970 range, while a sustained hold above that floor would keep alive the possibility of another test of $4,100 resistance. Gold has fallen roughly a quarter from its all-time high near $5,600 reached in January 2026, and the $4,000 psychological level continues to act as a line in the sand for bulls and bears alike.gulfnews+3