XAU/USD falls as the Federal Reserve holds rates but hints at a potential increase by year-end, reducing gold’s appeal.
Gold prices slid to around $4,280 in early Asian trading Thursday after the Federal Reserve kept its benchmark interest rate unchanged but indicated a possible hike later this year. The Fed’s decision to maintain rates at 3.5%-3.75% was unanimous under new Chair Kevin Warsh, who emphasized restoring price stability.
Markets now price in a 78% chance of a December rate hike, up from 61% before the Fed’s announcement. Gold, which does not yield interest, typically underperforms in high-rate environments as investors seek higher returns elsewhere.
Geopolitical developments, including a pending U.S.-Iran agreement on maritime security, had minimal immediate impact on gold’s movement.