Hawkish Fed Hold Caps Gold’s Rally as War Risk Supports $4,050

Happy Friday, traders. Welcome to our weekly market wrap, where we take a look back at the last five trading days with a focus on the market news, economic data, and headlines that had the most impact on gold prices and other key correlated assets—and may continue to do so in the future.

So, what kind of week has it been?

Here’s what you need to know:

1. Gold remained supported but range-bound, rallying above $4,100/oz before retreating toward $4,050/oz on Friday. Even with the late-week pullback, the metal appeared headed for its first monthly gain since February.

2. The Federal Reserve held interest rates unchanged on Wednesday, sparking a relief rally, but three dissents in favor of a 0.25% hike reinforced the risk that tighter policy could still arrive later in 2026.

3. Renewed instability surrounding the US-Iran war and Middle East shipping routes supported gold’s safe-haven appeal, even as the conflict’s inflationary implications created a longer-term headwind.

4. Next week’s focus will remain on developments in the Middle East before the July Jobs Report is released on Friday.

So, What Kind of a Week Has It Been?

Gold prices remain supported but range-bound. The two primary drivers of trading activity in the yellow metal—the global impact of the US-Iran war and the effect it, along with other macroeconomic forces, may have on monetary policy—provided gold with both lift and downward pressure at different points this week. While the shorter-term implications produced positive signals for gold, the longer-term outlook for both the Middle East conflict and interest rates is generally bearish. Still, despite limping a bit over the finish line, gold prices appear headed for their first monthly gain since February.

Three Hawkish Dissents Complicate the Fed’s Hold

The week’s primary scheduled event was Wednesday’s FOMC decision and the post-meeting press conference led by Chair Kevin Warsh. The central bank again held policy interest rates unchanged, in line with the market’s consensus base case, but a relief rally of more than $40/oz—taking gold to $4,085 during the US session and briefly above $4,100/oz during Asian trading—suggested that at least some risk premium had been attributed to a possible hike.

Of course, the possibility that the Fed’s next move will be a hike now looms larger, with three officials dissenting in favor of a 0.25% increase. Beyond the immediate reprieve, Warsh’s decision to withhold forward guidance leaves markets and economists with little visibility even four to eight weeks out. With inflation neither surging nor cooling in a meaningful way, the clearest anchor available to analysts is Warsh’s consistent rhetoric that high inflation is “unacceptable,” which implies a greater likelihood that the Fed raises rates in 2026 before it cuts them. Looking at gold’s chart for the week, we can see where the market began to digest that possibility: Thursday’s spike to the weekly high was followed by a steep drop into Friday morning, with prices returning to roughly $4,050/oz.

War Risk Supports Gold but Raises the Inflation Threat

The geopolitical and energy-supply instability centered on the US-Iran war and the Strait of Hormuz—and reverberating around the globe—remains the biggest story for the path of inflation and, therefore, monetary policy across major economies. The pause in hostilities over the weekend was short-lived, as previous pauses have been, with both the US and Iran resuming bombing attacks and other aggressive measures before Tuesday evening. The renewed conflict contributed to another bout of pressure on gold as oil prices, and their anticipated contribution to inflation, moved higher early in the week.

Just when it appeared that markets were returning to the cycle repeated since April, the conflict’s potential footprint began to expand. The other reliable shipping lanes available to Middle Eastern oil producers may be becoming as dangerous as the Strait of Hormuz, amid widening threats and attacks by the US and Iran, as well as a Ukrainian strike against an Iranian vessel this week. The prospect of a broader disruption triggered gold’s traditional safe-haven role while pushing the US Dollar Index and Treasury yields lower, contributing to the metal’s midweek rally. Here again, however, the longer-term view is more concerning than supportive for gold. An actual constriction of other key shipping ports—not merely the looming threat—would likely drive oil back toward $150/bbl, push global inflation higher, and force the US and other G7 economies toward higher interest rates.

Looking Ahead

The main focus when trading reopens next week will be developments in the Middle East. The calendar also includes a critical data point at the end of the week, with the July Jobs Report due on Friday.

In the meantime, traders, I hope you can get out and safely enjoy your weekend for the next couple of days. After that, I’ll see you back here next week for another market recap.