Gold Prices Continue Downward Trend Following US Federal Reserve Decision to Maintain Interest Rate

Gold Prices Plummet to One-Month Low as Fed Keeps Rates Unchanged

Gold prices extended losses on Wednesday, falling to a one-month low, as the U.S. Federal Reserve kept interest rates steady as expected and traders grew concerned about inflation stemming from the war in the Middle East. The price of spot gold dropped 1.4% to $4,528.17 per ounce by 2:14 p.m. EDT (1814 GMT), its lowest level since late March.

U.S. gold futures settled 1% lower at $4,561.50. The Fed's decision to hold interest rates steady was not a surprise, but it was notable for its most divided decision since 1992. The policy statement highlighted rising concerns about inflation, which drew three dissents from officials who no longer feel the U.S. central bank should communicate a bias towards lowering borrowing costs.

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The World Gold Council reported that global gold demand rose 2% year-on-year in the first quarter of 2026, driven by a surge in purchases of gold bars and coins, as well as a 3% growth in buying by central banks. However, jewelry demand declined by 23% compared to the same period last year.

The Fed's decision has reinforced traders' bets that interest rates will not be cut this year or well into the next. Inflation fears have flared up with global oil prices trading above $100 a barrel due to the U.S.-backed war against Iran. The prolonged conflict between the U.S. and Iran has also led to concerns about the impact on the global economy.

Donald Trump discussed how to mitigate the impact of a possible months-long U.S. blockade of Iran's ports with U.S. oil companies, as the U.S. president urged Tehran to sign a deal. Tehran warned of "unprecedented military action" against continued U.S. blockading.

Other metals also declined in value, with spot silver falling 2.7% to $71.08, platinum falling 3% to $1,881.21, and palladium easing 0.4% at $1,454.52.

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