Gold price rebounds from sub-$4,000 dip as split Fed holds fire, silver jumps

Gold sank below $4,000 an ounce for the first time since mid-July on Wednesday, then rebounded within minutes of the Federal Reserve’s decision to leave interest rates unchanged, a hold delivered over three dissenting votes and against a fresh eruption of fighting between the US and Iran.

The Comex most-active August contract slid as low as $3,993.80 during the morning as interest-rate swaps assigned better than a one-in-three chance to a quarter-point hike. By 2:15 p.m. in New York the contract had rallied to $4,080.80 an ounce, up 1% from Tuesday’s settlement and almost $90 above the session low. Spot gold traded 1.3% higher at $4,081.10.

Silver rallied harder. The September contract jumped 2.2% to $58.78 an ounce, pulling further away from the 2026 low of $55.50 set two weeks ago, while spot silver gained 2.5%.

The Fed kept its target range at 3.5% to 3.75% for a fifth straight meeting, but the 9-3 vote laid bare the split on the committee: Cleveland Fed president Beth Hammack, Minneapolis’ Neel Kashkari and Dallas’ Lorie Logan all preferred an immediate quarter-point increase, one more hawkish dissent than Bank of America had pencilled in. The statement said inflation “remains elevated” relative to the 2% goal, “in part reflecting supply shocks that have driven price increases in certain sectors, including energy.”

Swaps implied roughly 38% odds of a hike going into the meeting, even though all but two of more than 100 economists surveyed by Bloomberg expected no change. The Fed has never raised rates with market-implied odds below 60%, Bank of America strategists noted this week, in data reaching back to at least 1994. Chair Kevin Warsh’s abolition of forward guidance has turned every meeting into a live event, and a handful of investors, most prominently Citadel Securities, had argued a surprise increase would burnish his inflation-fighting credentials.

The decision “could prove pivotal for the next leg in gold,” Ahmad Assiri, a strategist at Pepperstone Group, said in a Bloomberg note before the announcement. “Should policymakers deliver a more-hawkish-than-expected message, reinforcing the prospect of higher rates or signaling greater concern over inflation, gold is likely to come under some pressure.” Before the decision, markets priced roughly 45 basis points of further tightening this year, with a September hike the base case.

War trade inverted

The morning slide came despite headlines that would once have lit a fire under bullion. Iran’s Revolutionary Guard fired ballistic missiles overnight at a US airbase and command centre in Jordan, all of them intercepted, and the US and Saudi Arabia struck Tehran-backed militias in Iraq, ending a days-long pause in hostilities. President Trump told Fox News the US would hit back hard, while Washington sanctioned two Iranian companies charging tolls for passage through the Strait of Hormuz. Brent crude topped $90 a barrel, West Texas Intermediate jumped more than 7% and 10-year Treasury yields rose to 4.65%.

Five months into the war, the inflation channel has overwhelmed the safe-haven one: dearer energy now feeds expectations of tighter policy, and bullion has lost nearly a quarter of its value since the fighting began, even as steady dip-buying has kept it pinned near $4,000 since its 2026 low in mid-July, with the mining stocks bearing the brunt.

The hold pulled precious metals equities off their morning lows. In New York, Newmont rose 0.5%, Barrick 0.3%, Wheaton Precious Metals 1.1% and Franco-Nevada 2.4%, while Agnico Eagle, which reports second-quarter results after the close, was little changed. Fresnillo trimmed an early slide of more than 4% to 0.4%. The outlier was Allied Gold, down 19% in Toronto after its C$5.5 billion takeover by China’s Zijin Gold collapsed on unmet closing conditions, with Zijin instead taking a 9.2% stake through a $295 million placement.

Gold is still down 5.5% in 2026 and nearly a quarter below its late-February record. Silver, more than 40% below its January peak above $100 an ounce, remains over 50% higher than a year ago.

(With files from Bloomberg)