Gold Hits $4,115 as Fed Holds Rates, Oil Surges on Iran Tensions
Precious metals erased recent losses to hit new intraday highs after the Federal Reserve kept rates steady, while escalating US-Iran tensions drove a sharp rally in crude oil prices.
Comex gold futures surged $77, or 2%, to an intraday high of $4,115 per troy ounce, while silver jumped 3.5% to $59.40. The rally completely erased the losses from the previous session. Domestic Indian markets mirrored this rebound, with near-month MCX gold futures climbing ₹1,500 per 10 grams to ₹1,42,097 and MCX silver gaining ₹4,600 per kilogram to trade around ₹2,19,000.
The immediate catalyst for precious metals was the US Federal Reserve's decision to hold its benchmark interest rate steady at 3.50%-3.75%. While three of the 12 policymakers dissented in favor of a 25-basis-point hike, the majority chose to maintain the status quo. The central bank noted that price pressures remain elevated relative to its 2% target, partly due to energy sector supply shocks, but kept its broader economic outlook largely unchanged from its June meeting.
The rate hold pushed the US Dollar Index down to 101.2, retreating from a 15-month high of 101.6 touched on Tuesday. A softer greenback makes dollar-denominated assets like gold cheaper for international buyers, providing a direct lift to bullion prices. The split vote, however, signals that the Fed remains concerned about inflation running above target for an extended period, leaving the door open for future tightening.
Crude spikes on Middle East tensions
Outside of monetary policy, geopolitical risk returned to aggressively price global commodities. Brent crude spiked 7.5%, or $6.15, to $88.13 a barrel, and WTI crude gained 6.3%, or $8, to $85.53. The sharp move followed US President Donald Trump's remarks on Fox News that Iran was "going to get a beating" following attacks on US forces.
Trump described Iran-backed militias as "a cancer on the world" and confirmed that US strikes on these groups in Iraq were coordinated with Baghdad. He added that diplomatic talks with Tehran would continue despite the escalation. For investors, the sudden spike in hostilities quickly overshadowed the Federal Reserve's messaging, reviving immediate fears of energy supply disruptions in the Middle East and accelerating capital flows into safe-haven assets like gold.
