Gold prices retreated during Thursday's Asian session following volatility after the Federal Reserve's latest policy decision, while renewed U.S. strikes on Iran added to market uncertainty.
By 4:05 pm AEST (6:05 am GMT), spot gold was down 0.7% at US$4,038.23 per ounce.
The U.S. Central Command said in a post on X that it had completed its “heavy wave of strikes” against Iran, targeting the south-western city of Abadan and Qeshm Island.
The U.S. military said the strikes were in response to Iran’s attempted missile attacks on U.S. forces in the region and “aimed to further diminish threats posed by Iran and its proxies to American forces, commercial shipping, and neighboring Gulf countries”.
Meanwhile, the Federal Reserve left its benchmark interest rate unchanged at 3.5% to 3.75%, as widely expected, although the decision came with an unexpected 9-3 vote.
Fed Chair Kevin Warsh's non-committal stance on further policy tightening created uncertainty over whether the central bank can keep long-term inflation expectations anchored and whether a rate increase remains possible at the September meeting.
According to the CME Group FedWatch Tool, markets are now pricing in roughly a 35% chance that the Federal Reserve will leave rates unchanged again in September, up from 24% a day earlier.
Investors are now focused on the advance reading of second-quarter U.S. gross domestic product (GDP), with the economy expected to expand at an annualised rate of 2.1% in the second quarter of 2026, matching the pace recorded in the previous quarter.
Markets will also monitor weekly U.S. jobless claims and the annual core Personal Consumption Expenditures (PCE) Price Index for further clues on the policy outlook.
