Gold prices ticked up slightly after the US Federal Reserve concluded its two-day monetary policy meeting by leaving interest rates unchanged. This decision offered some support to gold, as higher interest rates typically increase the opportunity cost of holding non-yielding assets like bullion. However, a stronger US dollar, which reduces gold's appeal for overseas buyers, and the Fed's hawkish commentary on future monetary policy moderated the gains.
Spot gold gained 0.4% to $4,080.38 an ounce by 0103 GMT on Thursday, while US gold futures for August delivery advanced 1.1% to $4,078. This uplift followed a period of investor caution, with prices largely staying on the sidelines ahead of the Fed's announcement. Prior to the decision, spot gold had slipped 0.1% to $4,021.87 per ounce on Wednesday, and US gold futures declined 0.4% to $4,021.70.
Market experts like Saumil Gandhi, Senior Analyst – Commodities at HDFC Securities, noted that gold had retreated from previous sessions' gains as traders awaited the Federal Reserve's policy outcome. Despite the unchanged rates, analysts believe the central bank's guidance on inflation and future monetary policy will significantly influence gold prices. Traders were also pricing in a higher likelihood of a rate hike in September, making the Fed's commentary a crucial focus for bullion markets. Expectations were that there was a 70% probability of rates remaining steady and a 30% chance of at least a 25-basis-point increase.
Geopolitical developments, particularly those involving Iran, the US, and the Strait of Hormuz, continued to add uncertainty to financial markets, further influencing investor sentiment in precious metals. In addition to gold, silver also experienced a notable decline, reflecting broader subdued investor sentiment across the precious metals segment. Despite the July volatility, the overall picture for gold in 2026 remains constructive, with prices up approximately 22% year-on-year by July 28.
The market consensus, according to CME Group's FedWatch Tool, largely anticipated the Fed to maintain rates, with attention primarily focused on Fed Chair Kevin Warsh's comments for indications regarding the timing of any future policy easing. JPMorgan, however, assigned a 50% probability to a hawkish hold, suggesting that recent energy prices might point to future disinflation. The US dollar index, which had ticked 0.1% lower on Wednesday, remained near a one-month high, making gold more expensive for holders of other currencies.
