Gold swings lower as Fed tilts hawkish after raising rates

Published Thu, Sep 17, 2026 · 08:20 AM

[NEW YORK] Gold swung lower after US Federal Reserve officials signalled another rate increase is likely in 2026, after raising on Wednesday (Sep 16) for the first time in three years.

Bullion slumped as much as 1.3 per cent after Fed chair Kevin Warsh used his post-decision briefing to reaffirm the threat posed by inflation to the US economy.

The Fed’s dot plot for rate projections showed another rate increase by the end of 2026. 

Gold’s slide – prices reversed from an earlier gain of as much as 1.7 per cent – reflects wider market reaction that interpreted the Fed’s guidance as hawkish.

Treasury yields fell along the curve, with the two-year yield hitting its highest since July 2024. The US dollar jumped as much as 0.6 per cent.

The US central bank’s “hawkish hike hits gold through a stronger US dollar and higher real yields”, said Elias Haddad, global head of markets strategy at Brown Brothers Harriman.

Gold was 0.6 per cent lower at US$4,264.30 an ounce by 4.15 pm New York time, heading for its third straight daily decline. Higher rates tend to weigh on bullion because it does not pay interest, and gold is now down about 4 per cent in September – from above US$4,700 in late August – as traders braced for this Fed decision.

In his post-meeting remarks, Warsh again vowed to contain inflation, saying too many categories of products were showing price increases.

“This summer’s inflation readings do not tell me that underlying trends have meaningfully improved,” he said.

The commentary potentially addresses the issue of the Fed’s credibility in fighting price pressures. That would undercut a key pillar of the so-called debasement trade that helped propel gold higher in August, and in 2025, as investors sought protection from inflation and monetary and fiscal excess. 

Expectations for a rate hike – the first since July 2023 – had been building in recent weeks, especially as renewed conflict in the Middle East sent oil prices surging above US$100 a barrel again. Ahead of the decision, traders had been pricing a 90 per cent chance of an increase.

The Federal Open Market Committee voted unanimously to increase the benchmark federal funds rate to a range of 3.75 to 4 per cent. The increase, and the committee’s statement, signalled that the Fed will keep policy tight to bring inflation back to its 2 per cent target, according to Bloomberg Economics. 

Platinum, palladium and silver also declined. BLOOMBERG