Early this morning, the Fed officially decided to keep interest rates unchanged.
The Fed Chair stated that the impact of the war is only short-term, but did not deny its significant influence on the market—leading to a reduction in the Fed’s planned rate cuts for 2026 to just one.
This move indicates that the Fed is taking an extremely hawkish stance amid war pressures and rising inflation risks as oil prices have surged in recent weeks—prompting capital flows to exit gold and shift into other risk assets, dragging gold sharply down from above $5,000/ounce to $4,800/ounce last night.
In the short term, the conflict is likely to escalate further as Iran is launching attacks on oil and gas facilities in neighboring countries in an attempt to disrupt supply and push oil prices higher.
As a result, gold may continue to face selling pressure as major funds keep taking profits to maintain margin requirements for other assets affected by the war.
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