Gold dips as Fed Chair Warsh says financial conditions not yet tight
Gold fell 0.21% to around $4,039 after Fed Chair Kevin Warsh said the central bank cannot yet label financial conditions as tight, while the Fed kept rates steady.
Gold (XAU/USD) slipped 0.21% on Wednesday, trading near $4,039, after Federal Reserve Chair Kevin Warsh said the Fed could not describe financial conditions as tight despite recent credit tightening. Warsh noted that the Fed’s tightening measures appear to be working, but inflation remains elevated and the central bank remains committed to a 2% price-stability target measured by the personal consumption expenditures index.
The Fed left its policy rate unchanged in the 3.75%-4.00% range, with two members – Governor Lisa Cook and Cleveland Fed President Beth Hammack – dissenting in favor of a 25-basis-point hike. The statement highlighted that economic activity is expanding, domestic spending is resilient, productivity growth is strong and capital investment remains robust. Employment gains have kept pace with labor-force growth and the unemployment rate has been largely unchanged.
While the Fed paused on rate hikes, it signaled that a hotter core PCE reading and strong GDP data later in the week could support another increase at the December meeting. Market pricing suggests an 85% probability of a rate hike in December.
Higher interest rates typically weigh on gold, which is also watched as an inflation hedge. Analysts surveyed by Reuters have lowered their gold price forecasts for the end of 2026. Technical analysis shows gold consolidating between $4,000 and $4,100, with bearish momentum indicated by the Relative Strength Index. A break above the September high near $4,100 could open the path to $4,200, while a drop below $4,000 may test support near $3,975.