Gold drops 2.6% after Fed signals possible rate hikes in 2026

Gold fell as much as 2.6% after the Federal Reserve kept its benchmark rate at 3.5% to 3.75% but pointed to possible rate increases later this year as it weighs inflation linked to the Iran conflict. New projections showed nine Federal Open Market Committee officials expect at least one quarter-point hike this year, while six see at least two. The decision was unanimous at the first meeting led by Fed Chair Kevin Warsh. Treasuries sold off, the US dollar strengthened and stocks fell after the decision. Gold, which pays no interest, typically weakens when rates rise. Fed officials also lifted their median 2026 inflation forecast to 3.6% from 2.7%.