FX.co ★ Gold Drops to 1-Month Low

Gold slipped toward $4,850 per ounce on Wednesday, trading near a one‑month low as unexpectedly strong producer inflation reinforced expectations that the Federal Reserve will maintain a hawkish policy stance. February wholesale prices jumped 0.7%, driving the 10‑year US Treasury yield up to 4.2% and lifting the US dollar index toward 99.9 ahead of today’s interest rate decision.

Although safe-haven demand remains supported by escalating tensions in the Middle East—following the death of Iranian security chief Ali Larijani and renewed strikes on energy infrastructure in the Gulf—the rising opportunity cost of holding non‑yielding assets has limited any substantial rebound in gold prices. Market participants are now focused on the FOMC’s dot plot and Chair Powell’s press conference for signals on whether persistent inflation pressures will further delay the rate cuts currently expected for 2026.

Even after a 3% pullback this week, gold is still up roughly 16% year to date, as investors continue to assess the broader economic impact of ongoing disruptions to shipping through the Strait of Hormuz.