Gold slid into the decision and then steadied, trading around $4,270 an ounce after a 2% drop over the prior three sessions as the rate increase was widely expected. By 7:52 a.m. in Singapore, spot bullion was up 0.2% at $4,273.82 per ounce. Silver gained 0.5% to $63.28, while platinum and palladium also edged higher.
Late Wednesday, every policymaker on the Federal Open Market Committee backed a 0.25 percentage point increase in the benchmark federal funds rate. Their median projection for the policy rate at the end of 2026 climbed to 4.1% from 3.8%, signaling support for more tightening. Investors read the guidance as hawkish. Treasury yields slipped along the curve and the dollar advanced, a mix that typically pressures gold since the metal does not pay interest.
During his post-decision briefing, Fed Chair Kevin Warsh emphasized that inflation is still troubling the US economy, pointing out that a broad swath of goods and services are increasing at over 3% on both six- and 12-month annualized measures. Data last week showed core US inflation in August was hotter than anticipated, raising concern that inflation drivers go beyond short-lived influences, with energy costs affected by the Iran war and tariffs cited as examples.
The move ran against President Donald Trump's wishes. He had recently cautioned that, absent a rate cut from the Fed, he would intensify his trade wars, and he wrote on social media that US borrowing costs should be 1% or lower, while stopping short of naming Warsh.
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Oil slipped on signs supply strains may be easing. Saudi Arabia intends to restore roughly 50% of the East-West pipeline's impaired capacity within days and expects to be fully operational in around six weeks, according to a person familiar with the plan.
Gold tends to trade opposite where investors see rates heading, and the latest signals tilted toward more hikes. The Bloomberg Dollar Spot Index was steady after a 0.5% jump the day before, adding another headwind for bullion. If you own precious metals, the tug of war to watch is simple: higher yields and a firmer dollar on one side, inflation worries on the other.
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