Gold Drops Over 4% As Fed Hawkish Outlook Weighs

Written by Sandra Leggero

Sandra Leggero has a background in financial markets, having spent more than 9 years in commodities trading for several European and Asian companies. She holds a degree in Economics from the University of Pavia and specializes in emerging markets.

, | Updated: March 19, 2026

Key Moments From Gold Market And Fed Policy Update

XAU/USD falls to $4,617, its lowest since February 2.
Stronger USD and rising Treasury yields pressure gold.
Bearish technical indicators point to further downside risk.

Gold Weakens On Hawkish Fed And Higher Rates

Gold (XAU/USD) dropped over 4% on Thursday, extending a week-long decline. Rising oil prices and geopolitical tensions in the Middle East reinforced the “higher-for-longer” interest rate outlook, reducing the appeal of non-yielding bullion.

The Fed’s recent hawkish stance further pressured gold, lifting US Treasury yields and strengthening the US Dollar.

Fed Maintains Rates, Flags Inflation Risks

The Federal Reserve held its benchmark rate at 3.50%-3.75%, as widely expected. Updated projections signal only one potential rate cut in 2026, while US PCE inflation forecasts were revised higher to 2.7% by December.

Fed Chair Jerome Powell emphasized elevated inflation and cautioned that progress on inflation is needed before any rate cuts. Rising energy costs from Middle East tensions contribute to near-term inflation pressures.

Middle East Conflict Fuels Energy And Market Risks

Iran launched missile strikes on Qatar’s LNG facilities, following Israeli attacks on Iran’s South Pars gas field. Additional strikes affected Saudi Arabia, UAE, and Kuwait energy infrastructure, heightening global market uncertainty.

Geopolitical tensions continue to boost oil prices, supporting the US Dollar and pressuring gold.

Technical Analysis Shows Bearish Momentum

XAU/USD broke below $5,000 and the 50-day SMA at $4,976, moving toward the 100-day SMA near $4,600. RSI is near 33, indicating strong selling pressure, while MACD confirms downside momentum.

A break below the 100-day SMA could expose February lows near $4,400, followed by the $4,000 psychological level. On the upside, resistance sits at $4,976, with $5,000–$5,100 as the next barrier.

Outlook Remains Negative In Near Term

Bearish technical indicators and macro risks suggest gold may continue to struggle. Rising Treasury yields, a stronger USD, and Middle East uncertainty are likely to weigh on XAU/USD in the near term.