Gold rose during Thursday, following three consecutive sessions of decline, and erased the previous session’s loss of 0.7%. The yellow metal is currently looking to extend its gains, targeting resistance levels at $4,368 then $4,404. On the downside, if the price falls below the daily pivot point of $4,316, it is likely to test support levels near $4,274 then $4,238.
Financial markets remain focused on developments in U.S. monetary policy, the Iran conflict, and currency markets, as investors assess the potential impact on global economic conditions and risk sentiment. The Federal Reserve’s latest signals of further monetary tightening have supported the U.S. dollar, which touched a seven-week high, while continued uncertainty surrounding the Iran war has kept geopolitical risks and energy-market disruptions in focus. Against this backdrop, investors are closely monitoring central bank decisions, developments in the Middle East, and movements in the dollar as they assess the outlook for gold, oil, and broader financial markets.
Market Watch
Federal Reserve Signals Further Tightening Amid Persistent Inflationary Pressures
The U.S. Federal Reserve signaled the possibility of further monetary policy tightening in the coming months after raising its benchmark interest rate by 25 basis points on Wednesday to a range of 3.75%–4.00%, marking its first-rate hike since 2023 amid persistent inflationary pressures.
The latest projections from members of the Federal Open Market Committee (FOMC) indicated that the median outlook points to one additional rate hike in 2026, with interest rates expected to remain elevated through 2027 before gradually declining in 2028. The median forecast for the federal funds rate at the end of 2026 rose to 4.1%, compared with 3.8% in the June projections.
Meanwhile, the Federal Reserve raised its inflation projections, with the Personal Consumption Expenditures (PCE) price index now expected to reach around 3.7% in 2026, compared with 3.6% in the June forecast. Inflation is then projected to ease to 2.3% in 2027 and 2.1% in 2028, before reaching the Fed’s 2% target in 2029.
The more hawkish outlook comes as inflationary pressures remain elevated, including higher energy costs linked to geopolitical tensions. Federal Reserve Chair Kevin Warsh said that inflation risks are tilted to the upside, while the central bank reiterated that its policy decisions are aimed at bringing inflation back to its 2% target in a sustainable manner.
Markets have also begun adjusting their expectations. Goldman Sachs now expects the Federal Reserve to raise interest rates by another 25 basis points in October, according to Reuters, reflecting a more hawkish interpretation of the latest policy signals.
Trump Hopes Iran War Is Nearing an End
U.S. President Donald Trump said he hopes the war with Iran is nearing an end, as the conflict continues to escalate and spread to additional fronts across the region. Trump’s comments came on Wednesday amid intensifying fighting between Saudi Arabia and Iran-backed Houthi forces in Yemen.
Speaking to reporters, Trump said, “We hope we’re nearing the end of the war,” adding that Iran wants to reach a deal, although he indicated that the outcome of ongoing efforts to reach an agreement remains uncertain. Trump also said he had received direct communication from the Iranian side but did not provide further details about the nature of the contact.
The comments come as the conflict has expanded to Yemen, where Saudi aircraft carried out strikes against Houthi positions, while the Houthis launched drones and missiles toward targets inside Saudi Arabia. Attacks on Saudi oil infrastructure have also increased concerns over the stability of global energy supplies.
The ongoing conflict is also affecting shipping through the Strait of Hormuz, a key global energy chokepoint through which roughly one-fifth of the world’s oil and liquefied natural gas supplies passed before the conflict began. Ship-tracking data showed that only three commercial vessels transited the strait on Wednesday, down from 12 the previous day, highlighting continued disruptions to regional shipping activity.
Trump had previously said earlier this month that he expected the war to end after the U.S. midterm elections in November. His latest comments suggest he hopes the conflict could conclude sooner, although the timing of any potential end to hostilities remains uncertain amid continued military activity in the region.
Dollar Touches Seven-Week High
The U.S. dollar touched a seven-week high against a basket of major currencies on Thursday, supported by expectations that the Federal Reserve may maintain a more restrictive monetary policy stance following its latest interest-rate decision and signals of another possible rate increase later this year.
The U.S. Dollar Index, which measures the greenback against a basket of major currencies, climbed to 100.36, its highest level since July 31, before easing slightly to around 100.13. The dollar’s gains came alongside higher short-term U.S. Treasury yields as markets reassessed the outlook for interest rates.
The Federal Reserve raised its benchmark interest rate by 25 basis points, marking its first rate hike in more than three years. The latest projections from policymakers also indicated the possibility of another increase in 2026. Markets are currently pricing in a roughly 90% probability of another 25-basis-point hike before the end of the year, according to CME Group’s FedWatch tool.
In currency markets, the euro fell to around $1.1456, its lowest level in seven weeks, while the British pound traded near $1.337 ahead of the Bank of England’s policy meeting. The Japanese yen also remained close to a two-week low as investors awaited the Bank of Japan’s interest-rate decision.
Meanwhile, the dollar pulled back slightly from its session high as oil prices extended their decline and concerns over potential energy supply disruptions eased. Investors continue to monitor major central bank decisions, particularly those of the Bank of England and Bank of Japan, for further clues about the global interest-rate outlook.