Fed Holds Rates, New Chair Leans Hawkish, Gold Down but Not OutView all comments (0)0The Federal Open Market Committee (FOMC) voted unanimously - 12 to 0 - on Wednesday to hold the federal funds rate steady within its current target range of 3.5% to 3.75%.The meeting, the first chaired by new Fed Chair Kevin Warsh, was interpreted as hawkish by markets, with Warsh placing inflation firmly in his sights."We recognise that inflation has been running well ahead of the Fed’s long-stated goal of 2% - and that has been the case for more than five years. Persistently high prices are a burden for the American people. But the recent past need not be prologue. I am pleased to report that members of the FOMC are unambiguous and unanimous: this Committee will deliver price stability."The tone was enough to send the US dollar sharply higher, as traders moved to price in at least one 25 basis point rate hike this year, with a potential second hike pencilled in for early 2027. The US Dollar Index climbed to levels not seen in over a year, while rate-sensitive gold tumbled more than $150 per ounce before finding its footing.US Dollar Index (Weekly Chart)Brent Crude (Daily Chart)However, Warsh’s subsequent press conference helped calm nerves. Rather than signalling an aggressive tightening cycle, he outlined a measured path, projecting the federal funds rate at 3.8% by year-end, easing back to 3.6% by the close of 2026.Gold remains technically weak, weighed down by a series of lower highs and trading below its 50-day moving average. That said, the meaningful downside may be limited. President Trump signed an initial peace agreement with Iran overnight, easing geopolitical tensions that have kept energy markets on edge. Brent crude has already responded, falling around $20 per barrel over the past week and retreating to levels last seen in early March.Gold (Daily Chart)With Middle East tensions now easing, inflation pressures should gradually soften, and with them, the dollar. In the near term, gold faces headwinds, but the longer-term outlook for the precious metal remains constructive.Solomon Global Disclaimer: This article is for informational purposes only and does not constitute financial advice. Buying physical gold as an investment involves risk, as the value of precious metal prices can be volatile. Historical financial performance does not necessarily give a guide of future financial performance. We recommend that you conduct your own independent research and seek professional tax, legal and financial advice before making any investment decisions.Fed Holds Rates, New Chair Leans Hawkish, Gold Down but Not OutView all comments (0)0