Gold falls 1.2% after US Fed rate rise on September 16
US Federal Reserve forecasts point to another rate rise in 2026 and no cut in 2027, with inflation expected to return to the 2% target in 2029
- Gold prices dropped 1.2% on September 16 after the U.S. Federal Reserve raised its benchmark interest rate by a quarter-percentage-point.
- The rate hike strengthened the U.S. dollar, making gold more expensive for foreign buyers and reducing the appeal of the non-interest-bearing metal.
- The Fed's projections indicated another rate increase is likely before the end of 2026, suggesting continued pressure on gold prices.
Gold fell 1.2% during US trading on Wednesday (September 16, 2026) after the US Federal Reserve raised interest rates, lifting the dollar and reversing bullion’s earlier gains. Fed projections pointed to another increase before the end of 2026, followed by unchanged rates in 2027.
The Fed’s widely expected quarter-percentage-point rise on September 16 took the benchmark overnight interest rate to 3.75–4.00%. Federal Reserve chair Kevin Warsh backed the unanimous decision, confirmed in the policy statement.
Spot gold traded at US$4,240.1 an ounce at 3.10pm US Eastern time (7.10pm GMT) on September 16, down 1.2%. Earlier in the session, bullion had gained more than 1% and reached US$4,365.57.
US gold futures for December delivery settled 1.3% higher at US$4,387.50 an ounce on September 16.
Stronger dollar and higher rates weigh on gold
The dollar strengthened against the euro after the Fed announcement, making gold more expensive for overseas buyers. Higher interest rates also reduce the appeal of gold, which pays no interest, despite the metal’s traditional role as an inflation hedge.
Independent metals trader Tai Wong said: “Warsh's comments are being read as hawkish on top of a hawkish dot plot, which reinforces the view that there will be additional hikes in the upcoming meetings. That is helping the dollar and will pressure metals in the short-term.”
Fed chair Kevin Warsh echoed the policy statement’s pledge to “deliver price stability” after the decision. Warsh said: “Our predominant focus is on the price stability side of our mandate. Plain fact is that inflation is too high, and has been for too long. This summer's inflation readings do not tell me that underlying trends have meaningfully improved.”
Persistent US inflation was linked to President Donald Trump’s global import tariffs, the energy shock following the start of the US-Israeli war with Iran and capital spending driven by the artificial intelligence boom. The rate increase has been characterised as an acknowledgement that the Trump administration had so far failed to bring inflation under control.
US price pressures had intensified since the Fed’s June meeting, partly because the Middle East war pushed up energy costs. Rising inflation increased concerns about how quickly the Fed could restore price growth to its 2% target.
Fed expects another 2026 rate rise and cuts from 2028
The Fed’s September projections indicated that rates would begin falling in 2028, after another increase in 2026 and a pause in 2027. Officials expected the federal funds rate to reach a range of 3.5–3.75% in 2029.
The Fed’s June projections had envisaged one quarter-percentage-point increase in 2026 and a cut of the same size in 2027. Officials also raised their longer-run rate estimate to 3.2% in September, compared with 3.1% in June.
The Fed’s dot plot, which records individual policymakers’ rate forecasts, showed 16 officials anticipating further increases in 2026, while two expected rates to remain unchanged.
Eighteen of the Fed’s 19 policymakers submitted rate forecasts. The missing submission strongly suggested that Fed chair Kevin Warsh had again declined to provide projections, as he had in June.
The future of the Fed’s forecasting process remains uncertain while the central bank formally considers broader changes, including how it communicates and assesses the data used to set monetary policy.
Fed raises 2026 inflation forecast to 3.7%
Fed officials raised their median forecast for US inflation in 2026, measured by the personal consumption expenditures price index, to 3.7% from June’s 3.6%. The forecast for 2027 remained at 2.3%.
For 2028, the Fed now projects personal consumption expenditures inflation of 2.1%, compared with 2% in June. Officials expect inflation to return to the central bank’s 2% target in 2029.
The Fed’s growth and employment outlooks were broadly steady. Officials projected US gross domestic product growth of 2.3% in 2026, up from June’s 2.2% forecast, and 2.4% in 2027.
The US unemployment rate was forecast by the Fed to end 2026 at 4.1%, matching the August reading, and remain at that level through 2029.
Silver, platinum and oil prices retreat
Spot precious metals and Brent crude fell during September 16 trading. Silver lost 1.7% to US$62.57 an ounce, platinum declined 2.3% to US$1,735.33 an ounce and palladium dropped 1.5% to US$1,269.95 an ounce.
Brent crude retreated after reports of additional Saudi crude shipments through Oman eased concerns over Middle East supplies. A smaller-than-expected fall in US crude inventories added to the pressure on oil prices.
