Gold price extends decline ahead of Fed decision

Gold declined for a third straight session as inflation concerns from the Middle East conflict continue to cloud the outlook for monetary policy ahead of the US Federal Reserve’s rate decision later in the day.

Spot gold fell another 1.3% to approximately $4,510 an ounce, extending a 2% decline for the week. US gold futures also dropped 1% to below $4,600 an ounce.

This takes bullion back to levels last seen at the end of March, during which it recorded its worst monthly performance since 2008.

The decline comes ahead of the upcoming interest rate decision by the US central bank, which according to most analysts is expected to hold off on cutting rates given the ongoing inflation risks. The World Bank said this week it sees a 24% spike in energy prices this year due to the war in the Middle East war.

“The market’s immediate focus remains on mediation efforts,” Ole Hansen, head of commodity strategy at Saxo Bank, told Bloomberg, referring to talks mediated by Pakistan to end the Middle East conflict. Earlier, US President Donald Trump urged Iran to “get smart soon” and sign a deal, following ​days of deadlock in negotiations.

Some technical selling emerged after “a break below recent support around $4,650,” Hansen also noted.

After surging to a record of nearly $5,600 in late January, gold has experienced multiple selloffs to erase more than half of its gains this year. The US-Iran conflict in particular produced a major headwind in the form of inflation, which reduces the chances of lower interest rates, a scenario that benefits bullion.

While these inflation worries could inhibit any recovery in the short term, many still see gold rising to much higher than current levels in the coming months and years. Major banks are still maintaining bullish price targets for this year, with Goldman forecasting $5,400 an ounce.

Over a longer horizon, bullion could still benefit from the same drivers that propelled it 60% higher in 2025, such as a global shift into the metal and away from the US dollar. Deutsche Bank recently predicted that prices could hit $8,000 an ounce within five years should the de-dollarization trend continue.

New data from the World Gold Council also gave gold a vote of confidence, as it showed that central banks have scooped up bullion at the fastest pace in more than a year during the January-March quarter.