Gold swings lower as Fed tilts hawkish after raising rates
The metal’s slide reflects the market interpretation of the US central bank’s guidance as hawkish
Gold prices fell as the Federal Reserve signaled a potential rate hike in 2026, following their first increase in three years on September 16. The metal dropped up to 1.3 percent after the Fed chair, Kevin Warsh, emphasized the threat of inflation to the US economy during his post-decision briefing. The Fed's projections indicated another rate rise by the end of 2026.
Gold's decline, reversing an earlier 1.7 percent gain, reflected the broader market's interpretation of the Fed's hawkish stance. Treasury yields fell across the curve, with the two-year yield reaching its highest since July 2024. The US dollar surged by up to 0.6 percent. Warsh reiterated the central bank's commitment to addressing inflation, stating that recent inflation readings did not show significant improvements in underlying trends.
This statement could undermine the so-called debasement trade that had supported gold prices in August and 2025. Other precious metals like platinum, palladium, and silver also declined.
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