Gold Pares Some Gains After Strong GDP

Gold prices steadied around $4,830 per ounce on Thursday after a sixth straight decline, the longest losing streak since late 2024, as the Federal Reserve’s hawkish hold outweighed geopolitical risks. The Fed kept rates unchanged and signaled just one cut this year, with Jerome Powell stressing that easing hinges on clearer progress in curbing inflation. Officials also highlighted rising uncertainty from the Middle East conflict, warning that higher energy prices could fuel inflation. Meanwhile, Iran launched missile strikes on a Qatari site housing the world’s largest LNG facility, escalating tensions after an Israeli attack on Iran’s South Pars gas field. While this supported safe-haven demand, it also pushed oil prices higher. Gold remains up about 12% year-to-date, but momentum has weakened as expectations for the scale of rate cuts have diminished and some investors sold holdings to meet margin calls elsewhere.

Gold futures fell toward $4,880 per ounce on Wednesday as a persistent hawkish hold from the Federal Reserve and elevated Treasury yields countered the safe haven appeal of intensifying Middle Eastern instability. The FOMC maintained the federal funds rate at the 3.5%–3.75% target range for a second consecutive meeting while signaling that only one rate reduction remains likely for 2026. While bullion initially found support from reports of airstrikes on Iran’s South Pars gas field and the killing of intelligence minister Esmaeil Khatib, the central bank’s focus on inflation risks has bolstered the dollar to increase the opportunity cost of holding non yielding assets. Policymakers noted that while job gains have remained low and the labor market shows signs of softening, the uncertain economic implications of the effective closure of the Strait of Hormuz necessitate a restrictive monetary stance.

Gold fell toward the $4,850 per ounce on Wednesday to trade near its lowest level in a month as surprisingly hot producer inflation reinforced expectations for a hawkish Federal Reserve policy hold. A 0.7% surge in February wholesale prices has pushed Treasury yields to 4.2% and bolstered the dollar index toward 99.9 ahead of today’s interest rate decision. While safe haven demand remains underpinned by the escalation of the Middle East conflict following the death of Iranian security chief Ali Larijani and fresh strikes on Gulf energy infrastructure, the rising opportunity cost of holding non yielding assets has capped any meaningful recovery. Investors are now focused on the FOMC dot plot and Chair Powell’s press conference to gauge if persistent inflationary heat will further delay anticipated rate cuts for 2026. Despite the 3% retreat this week, gold maintains a year to date gain of about 16% as markets navigate the fallout from disrupted shipping through the Strait of Hormuz.