June 18, 2026
The Federal Reserve’s first interest rate meeting under new Chairman Kevin Warsh initially dealt a significant blow to the price of gold. But as early as the following day, an interim agreement with Iran signed by U.S. President Donald Trump turned the tide. The resulting decline in oil prices eased inflation concerns and allowed gold to partially recoup its initial losses.
Although the Federal Reserve’s Open Market Committee, as expected and unanimously, kept the benchmark interest rate within the range of 3.50 to 3.75 percent—this time even Stephen Miran, who had previously always voted for cuts, joined the majority—the new interest rate projections revealed a significant shift in monetary policy. Nine of the 19 Fed members believe an interest rate hike is necessary before the end of the year, with six of them even targeting increases of more than 25 basis points. Just three months ago, no one on the committee had anticipated a tightening. Currently, only a single member sees room for rate cuts.
The Fed attributes this restrictive stance to a persistently robust economy, strong productivity growth, and stubborn, supply-driven inflation, particularly in the energy sector. As a result, gold came under pressure immediately after the meeting, falling to $4,290.52 per ounce and posting daily losses of just under one percent.
However, concerns about rising interest rates—the classic headwind for the non-interest-bearing precious metal—were short-lived. With the signing of the U.S.-Iran interim agreement, oil prices plummeted. This stripped the markets’ interest rate concerns of their main driver: inflationary pressure stemming from the energy sector. As a result of the geopolitical détente, gold regained some ground. Short-covering in the futures market further reinforced this upward movement.
The latest market reactions highlight the gold price’s high sensitivity to the close interplay of geopolitics, energy costs, and monetary policy. Against this backdrop, an alternative central bank strategy is also coming into focus: Under Warsh, the Fed could in the future attempt to tighten financing conditions more through accelerated balance sheet reduction rather than through direct interest rate hikes. For gold investors, however, the oil price remains the decisive variable for the time being. If the oil price remains capped due to the easing of tensions in the Middle East, the Fed will gain monetary policy leeway, which is likely to provide a further boost to the gold price.
Source：https://goldinvest.de/en/gold-signing-of-iran-deal-partially-offsets-restrictive-fed-signals
