XAU/USD falls after the Federal Reserve keeps rates steady but projects a higher terminal rate and elevated inflation.
Gold prices retreated after the Federal Reserve maintained its benchmark rate at 3.50% to 3.75% but signaled a more hawkish stance in its latest projections. XAU/USD traded between $4,330 and $4,280 following the decision.
The Fed’s Summary of Economic Projections showed policymakers expect inflation to remain above 3%, with the median Fed Funds Rate projection rising to 3.8% by year-end. Core PCE inflation is forecast at 3.3%, well above the 2% target, while economic growth is seen at 2.2% through 2026.
The yellow metal declined as half of FOMC members anticipated rates exceeding 3.75%, reinforcing expectations of prolonged restrictive policy. The Fed also removed forward guidance language, adding to market uncertainty.