Fed officials hint at potential interest rate increases, weighing on gold prices despite easing oil-driven inflation concerns.
Gold futures fell sharply Thursday after the Federal Reserve indicated its next policy move could involve raising interest rates. The decline erased earlier gains driven by lower oil prices, which had eased inflation fears as ship traffic in the Strait of Hormuz resumed normal levels.
Prior to the Fed’s comments, gold had traded near session highs, supported by a drop in crude prices. Analysts had expected a more neutral stance from the central bank, but hawkish signals reversed sentiment. The market had previously priced in a pause in rate hikes.
The shift in Fed rhetoric overshadowed geopolitical developments, leaving traders to reassess expectations for monetary policy and its impact on non-yielding assets like gold.