Gold Price Forecast: Hawkish Fed Triggers Gold Plunge, Can US-Iran Agreement Push Gold Past $4,360?

TradingKey – During today’s (June 18) Asian session, gold prices ( XAUUSD) maintained an intraday rebound, boosted by the positive prospect of a potential early signing of the US-Iran agreement, recovering most of the losses from Wednesday’s plunge triggered by the Federal Reserve’s hawkish stance. During the session, the price rebounded from Wednesday’s low of $4,219 to $4,329.9. Technical analysis indicates that $4,360 is key resistance for bulls in the near term, and only a breakout above this level will open up further upside potential for gold prices.

The Federal Reserve’s hawkish stance weighs on gold prices, while the US-Iran agreement provides short-term support.
On June 17, Eastern Time, the Federal Reserve announced its latest interest rate decision, maintaining the target range for the federal funds rate unchanged at 3.50% to 3.75%. The Fed emphasized that inflation remains above its 2% target, with some price pressures stemming from energy supply shocks triggered by the conflict in the Middle East, while economic activity continues to expand at a steady pace and the labor market has not deteriorated significantly. This suggests the central bank is currently in no rush to pivot toward monetary easing.

For the market, holding rates steady was in line with expectations, making the dot plot and the remarks from newly appointed Fed Chair Warsh the key focus. The latest dot plot revealed that among the 18 officials submitting forecasts, nine expect at least one rate hike this year (including six who foresee two or more hikes), while only one official remains supportive of a rate cut. Subsequently, Warsh stated at a press conference that the Fed is firmly committed to its 2% inflation target, noting that with inflation still elevated and the economy remaining resilient, the central bank will not rush to ease policy.

The market had previously bet on potential Fed rate cuts this year, but those expectations have now sharply reversed, with traders beginning to reprice the risk of rate hikes. This exerts direct pressure on gold. As a non-yielding asset, gold typically loses appeal when markets anticipate further rate hikes, which generally support the U.S. dollar and Treasury yields. Consequently, the opportunity cost of holding gold rises, naturally limiting its upside potential.