Warsh's First Fed Meeting Triggers Gold's Plunge: Nine Officials See Rate Hike as Bullion Plummets to $4,172

Gold drops to $4,172 as Fed signals 2026 rate hike; technicals oversold but resistance at $4,330; long-term forecasts still above $4,900.

Bullion has fallen into its deepest funk of the year, and the trigger is unmistakable: the Federal Reserve’s June 17 policy gathering under new Chair Kevin Warsh delivered a hawkish shock that has sent gold below $4,200 and into oversold territory. The precious metal closed Friday at $4,172.90 per troy ounce, shedding 1.3 percent on the day and notching its third consecutive weekly loss. The slide now stands at roughly 8 percent on a monthly basis, while the distance from the January 52-week high of nearly $5,642 has widened to almost 26 percent.

The selloff has a clear driver: the Fed's abrupt tone shift. Nine of the 19 members of the US central bank now anticipate at least one rate increase before the end of 2026, a stark reversal from the easing bets priced at the start of the year. Markets currently assign a 70 percent probability to a hike by September. The median year-end fed funds rate projection moved to 3.8 percent from 3.4 percent, and the official statement jettisoned any mention of accommodation. Warsh himself offered no personal forecast, but the dollar surged to an eight-week high, crushing the appeal of non-yielding gold. Goldman Sachs reacted swiftly, slashing its year-end target for the metal by $500 to $4,900, citing the end of any rate-cut expectations for 2026.

Technical indicators reflect the damage. The 50-day moving average — now near $4,553 — is an increasingly distant ceiling, while the relative strength index has fallen to 35.4, close to the oversold threshold that often signals a bounce. Yet buying interest remains scarce. The zone between $4,330 and $4,355 per ounce presents heavy resistance, and the next major support sits at the psychologically key $4,000 level. Thin liquidity due to the Juneteenth holiday amplified some of last week’s moves; with US traders returning Monday, the true depth of demand at current prices will be tested.

Institutional sentiment is mixed but leans bearish. The biggest gold exchange-traded fund, SPDR Gold Shares, reported holdings of roughly 1,013 metric tonnes in mid-June, while year-to-date outflows from that vehicle alone have totaled $8.3 billion. The pace of redemptions has slowed, but the direction remains negative. On the other hand, central banks continue to provide a structural backstop: net purchases reached 244 tonnes in the first quarter of 2026, according to data cited in the secondary report, and the buying from official institutions shows no sign of abating.

Long-term bank forecasts remain strikingly bullish despite the rout. J.P. Morgan still projects a year-end price of $6,000 per ounce and sees $6,300 as achievable by 2027. That view stands in stark contrast to Goldman’s revised $4,900 target, but both numbers imply significant upside from current levels, underscoring the sharp divergence between near-term policy fears and the fundamental case for gold anchored in inflation and geopolitical demand.

The coming days will determine whether the selling pressure eases or intensifies. Tuesday brings US purchasing managers’ indices, but all eyes are on Friday’s release of the core PCE price index for May — the Fed’s preferred inflation gauge. The headline US inflation rate has already climbed to 4.2 percent, fueled partly by the Iran conflict, though some diplomatic easing in the Middle East has trimmed safe-haven demand. Should the PCE print come in hotter than expected, the hawkish narrative will harden, and gold’s slide toward the $4,000 floor could accelerate.