Gold price (XAU/USD) loses ground to near $4,210 during the early Asian session on Friday. The precious metal extends the decline after the US Federal Reserve (Fed) held interest rates steady in the June policy meeting but signaled rate hikes could come this year.
The Fed on Wednesday made its first decision on interest rates under new Chair Kevin Warsh, as the Federal Open Market Committee (FOMC) voted unanimously to hold rates between 3.5% and 3.75%.
The federal funds rate has held there since the US central bank lowered rates by three-quarters of a percentage point in the latter part of 2025. Fed officials signaled the chance of higher rates as they assess the impacts of the Iran war on inflation.
“Persistently high prices are a burden for the American people, but the recent past need not be prologue,” said Kevin Warsh in his debut press conference as chairman. Officials are unambiguous and unanimous. This committee will deliver price stability.”
It’s worth noting that Gold is often used as a hedge against inflation but does not yield interest, making it less attractive when interest rates are high.
On the other hand, the US-Iran peace agreement could provide some support to the yellow metal. Bloomberg reported on Thursday that the interim peace deal between both countries took effect, and shipping started returning to the Strait of Hormuz as the US declared an end to its blockade and a complex negotiating period over Tehran’s nuclear program began in earnest.
Earlier Thursday, US President Donald Trump said that “oil is flowing,” hours after signing a memorandum of agreement to extend a ceasefire and begin negotiations to end the conflict he started alongside Israel at the end of February.
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