Gold futures on the New York Commodity Exchange, specifically the most active August 2026 contract, fell 1.79% on Thursday, settling at $4,276.30 per ounce.
Following the conclusion of the Federal Reserve's monetary policy meeting, where interest rates were held steady in the 3.5% to 3.75% range and hawkish signals were sent, gold prices turned lower for the day. The metal plunged to a two-day low of $4,219 per ounce before paring some losses.
This was the first policy meeting chaired by Kevin Warsh since he assumed the role of Federal Reserve Chair on May 22nd. In its statement, the Fed removed forward guidance language, noting that despite uncertainties from the Middle East conflict, the economy continues to expand solidly, the labor market remains stable, and the unemployment rate has remained largely unchanged.
However, the Fed stated it remains committed to achieving price stability, as supply shocks have pushed up prices for products in certain sectors, including energy, keeping inflation above the central bank's 2% target.
The release of the Fed's policy decision pushed U.S. Treasury yields and the dollar index higher, putting downward pressure on the price of gold.
The Summary of Economic Projections (SEP) released by the Fed showed market expectations for the federal funds rate to reach 3.8%, up from the 3.4% forecast in March. Economic growth is projected at 2.2% by the end of 2026. The Fed's preferred inflation gauge, the core Personal Consumption Expenditures (PCE) index, is forecast at 3.3%, which is 1.3 percentage points above the Fed's 2% target.
Among the 19 meeting participants, nine anticipate a need for rate hikes in 2026, eight expect rates to remain unchanged, and only one deemed a single rate cut in 2026 as appropriate. Chair Warsh did not submit his views on the expected path for interest rates.
Elsewhere in precious metals, the July silver futures contract dropped 2.93%, closing at $67.96 per ounce.
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