Gold fell 1.2% on Friday to $4,054.20 an ounce as traders recalibrated Federal Reserve rate expectations following this week's meeting, though bullion remains on track for its first monthly gain since February. Cooler-than-expected inflation data and mixed signals from Fed Chair Kevin Warsh left markets uncertain about a September rate move.
Gold dropped 1.2% to $4,054.20 an ounce by 06:57 ET on Friday. Gold futures also retreated 1.2% to $4,049.30 an ounce, as investors reassessed the outlook for U.S. interest rates after the Federal Reserve's latest meeting this week. Even so, bullion is still headed for its first monthly gain since February.
Warsh's mixed signals cloud the rate outlook
Partly cushioning the drop was a cooler-than-expected June reading of an inflation gauge closely watched by the Fed. Markets have been trying to gauge the rate trajectory since the Fed left borrowing costs unchanged on Wednesday.
Fed Chair Kevin Warsh reiterated that policymakers stood ready to address inflation pressures, suggesting a willingness to raise rates in the future. However, Warsh later seemed to indicate that bond markets may already be doing the Fed's tightening job, leaving traders uncertain about the central bank's next step.
Traders now see about a 63% chance of a rate increase in September, down from more than 80% a week earlier, according to CME FedWatch. According to analysts at ING: "may be reluctant to translate its price stability rhetoric into effective policy tightening." The prospect of the Fed holding off on a hike could support gold by reducing the opportunity cost of holding the non-yielding asset.
Firmer dollar weighs, but the July gain holds
At the same time, the dollar strengthened slightly, following its biggest one-day drop since January 2023 on Thursday. A firmer dollar can make gold more expensive for overseas buyers.
Spot gold was still trading up about 1% in July, keeping it on track for its first monthly gain since February. The metal has been battered throughout 2026 by rising anxiety over high oil prices and their impact on inflation, which could in turn push global central banks toward a more hawkish stance.
Source: Commodities & Futures News
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