Gold trims gain as Fed holds rates, signals hike support

Published Thu, Jul 30, 2026 · 07:42 AM

[NEW YORK] Gold pared gains after the Federal Reserve left interest rates unchanged as expected, while signalling that support for higher borrowing costs is growing as officials assess the inflationary impact of the Iran war.

Bullion rose as much as 2.2 per cent before paring gains. The Federal Open Market Committee (FOMC) voted 9 to 3 to hold the benchmark federal funds rate in a range of 3.5 per cent to 3.75 per cent.

Three officials dissented in favour of raising rates by a quarter percentage point. 

Treasury yields and the dollar pushed lower after the rate decision, helping lift gold as it pays no interest and is priced in the greenback. Swap traders now see a less than 60 per cent chance of a rate hike at the Fed’s September meeting.

Still, renewed hostilities between the US and Iran pushed Brent crude above US$90 a barrel, fuelling inflation concerns and damping appetite for riskier assets.

Long-term Treasury yields also rose, underscoring concerns that inflation could remain elevated.

“We continue to see oil prices and inflation pressures moving higher as inventories drain further amid the lack of peace in the Persian Gulf. As such, gold is unlikely to sustain today’s gains for an extended period,” said Bart Melek, global head of commodity strategy at TD Securities.

“The yellow metal is likely to drift back toward US$3,900 per ounce as oil remains under pressure to move even higher through the summer.”

The precious metal is down by nearly a quarter since the US-Iran war began five months ago, with high energy prices stoking inflationary pressures and raising the likelihood that rates will stay higher for longer. 

The FOMC vote on Wednesday marked the fifth straight time Fed policymakers have opted to leave rates unchanged.

But the dissents suggest it could become more challenging for the newly-installed Fed chairman Kevin Warsh to continue holding if inflation fears grow.

Despite his previous vows to restore inflation to the Fed’s 2 per cent goal, Warsh has stopped short of saying he would raise rates.

In response to a question from reporters on Wednesday, he edged slightly closer to that step.

“If inflation continues to be elevated through the forecast period, interest rates could well be part of that solution, but I wouldn’t say it’s in isolation,” he said.

Spot gold rose 0.6 per cent to US$4054.82 an ounce as of 4.29 pm in New York. Silver gained 0.3 per cent. Platinum inched higher while palladium slipped. The Bloomberg Dollar Spot Index, a gauge of the US dollar, slipped 0.3 per cent. BLOOMBERG