Gold Market Reaction

Gold spot prices slipped 1.1% to settle at $4,209.15 per ounce on Thursday, while front‑month gold futures fell 3.5% to $4,227.75 per ounce. The price decline was attributed to a stronger U.S. dollar that rose on the back of hawkish signals from the Federal Reserve, offsetting any market optimism from the signing of a U.S.–Iran interim peace memorandum.

Federal Reserve Decision

The Federal Open Market Committee voted unanimously to keep the federal funds target range unchanged at 3.50%‑3.75%, matching expectations. However, the revised Summary of Economic Projections (SEP) moved the projected end‑2026 funds rate to 3.8%, up from the 3.4% level in the March dot‑plot. The new dot‑plot showed a hawkish tilt: nine of the 18 participants penciled in at least one rate hike for 2026, and the overall outlook shifted from an expectation of at least two 25‑basis‑point cuts to a single 25‑basis‑point hike.

Fed Chair Kevin Warsh Initiatives

The meeting marked the first policy decision under new Fed Chair Kevin Warsh. In his post‑decision press conference, Warsh announced the formation of task forces to review five core areas of monetary policy: (1) the Fed’s communications strategy, including future press conferences and dot‑plot releases; (2) the central bank’s balance‑sheet policies; (3) the use and reliance on existing data sources; (4) productivity and employment considerations in the era of artificial intelligence; and (5) the inflation framework, which will retain the 2% target without revision.

U.S.–Iran Interim Peace Accord

President Donald Trump signed a memorandum of understanding (MoU) with Iran at a dinner in France’s Versailles palace. Iranian officials, including President Masoud Pezeshkian, posted images of the signed document, describing it as a historic step. The MoU terminates military operations on all fronts, including Lebanon, and initiates a 60‑day period for further negotiations toward a final agreement. Iran committed not to procure or develop nuclear weapons, and agreed that any enriched material would be disposed of through a mutually agreed mechanism during the negotiation window. The accord also provides for the reopening of the Strait of Hormuz without tolls or charges for the 60‑day period.