rewrite this title and make it good for SEOGold falls 1% after Fed holds rates steady, signals rate hike this year

Gold prices reversed course to drop more than 1% on Wednesday after the U.S. Federal Reserve held its benchmark interest rate steady but pointed to a hike in borrowing costs later this year, sending the dollar higher.

Spot gold was down 0.7% at $4,299.89 per ounce by 2:40 p.m. EDT (1840 GMT). U.S. gold futures settled 0.6% higher at $4,381.40.

Nine of the ‌U.S. central ⁠bank’s 19 ⁠policymakers now believe they will need to raise the policy rate this year, according to projections published on Wednesday after the Fed announced its decision to leave the policy rate in its current 3.50%-3.75% range.

In his inaugural press conference following his first policy meeting as Fed Chair, Kevin Warsh said he was launching five task forces to review how the central bank conducts its business in critical policy areas.

“This is a ⁠new Fed – ‌Warsh is sharp, sure, animated – he will be a steward and not a trustee. The message is changes are coming, but after due consideration,” ⁠said Tai Wong, an independent metals trader.

Also Read | Dollar jumps as Fed holds rates but projects one hike later this year “He also said twice that he sees rates restrictive only in housing… which is making him more hawkish than Powell. I think that’s what’s driving market losses. The statement and dot plot are hawkish and Warsh did nothing to push back against it.” Markets now see a 78% chance of a rate hike in December this year, jumping from 61% before the Fed decision, according to the CME FedWatch Tool. The U.S. dollar ‌extended gains after the rate decision, making greenback-priced bullion more expensive for overseas buyers, while oil markets were also higher, keeping inflation concerns alive.

While gold is often seen as a ⁠hedge against inflation, elevated interest rates tend to pressure bullion, as it offers no yield.

Spot gold touched a more than six-month low last week as inflation fears stoked by the Iran conflict boosted expectations of rate hikes.

U.S. President Donald Trump said that the agreement reached this week with Iran was not final, and that he could resume a bombing campaign if he did not like it.

Silver fell 1.1% to $69.41 per ounce. Platinum lost 2% to $1,768.03, and palladium fell 1.1% to $1,336.91.