Precious metals faced significant pressure as the Federal Reserve issued an inflation warning linked to escalating Middle East conflicts and surging energy prices. Silver prices declined for a sixth consecutive session, while gold stabilized after a sharp drop of nearly 4% in the previous trading day. In after-hours trading, gold was quoted at $4,823.90 per ounce and silver at $75.42 per ounce.

The Federal Reserve decided to maintain interest rates within the 3.5%-3.75% range, a move that aligned with market expectations. Chair Jerome Powell emphasized the critical importance of keeping rates at a mildly restrictive level. A new phrase was added to the Fed's policy guidance, noting that the economic impact of Middle East conflicts remains "uncertain."

In a rare statement concerning his future at the central bank, Powell addressed the public on Wednesday following the launch of a Department of Justice investigation. He stated he has no intention of resigning from his position as Governor before the investigation concludes. Powell added that if a successor is not confirmed before his term ends in May, he would serve as interim Chair—a temporary role granted by the Fed when the chair position is vacant. The Justice Department probe has raised concerns about political interference at the Fed, undermining confidence in U.S. assets and providing some support for gold prices.

Rising oil prices due to intensified conflict involving Iran have heightened inflation worries, adding downward pressure on gold. This was compounded by U.S. Producer Price Index (PPI) data for February, which rose 0.7% month-over-month, exceeding expectations. These factors have strengthened market speculation that the Fed may delay interest rate cuts this year.

Recent developments in the Middle East—including an attack on Iran’s large South Pars gas field and subsequent Iranian strikes on the world’s largest liquefied natural gas (LNG) facility in Qatar—triggered a broad sell-off in risk assets, including equities. This forced some investors to liquidate gold holdings to raise cash.

Ewa Manthey, Commodities Strategist at ING, noted in a report that the sharp decline in precious metals “looks like a cross-asset position adjustment.” She explained, “Oil is reacting to supply risks, while gold’s decline is likely due to profit-taking and broad liquidation by investors amid a risk-off sell-off, a stronger dollar, and rising real yields.”