Gold Prices Drop After US Federal Reserve Raises Rates and Signals More Hikes

Gold prices fell sharply after the US Federal Reserve raised interest rates on Wednesday for the first time in three years and hinted that another rate increase is likely to happen this year. Bullion slumped by as much as 1.3 percent after Fed Chair Kevin Warsh spoke at a post-decision briefing. During the briefing, Warsh reaffirmed that inflation poses a continuing threat to the US economy. The central bank released a dot plot for rate projections that pointed to another rate increase before the end of 2026. Before the drop, gold prices had climbed by as much as 1.7 percent earlier in the day. The sudden reversal in prices reflects a wider market reaction that viewed the Fed's guidance as hawkish. Treasury yields also fell following the announcement.