Gold Price Recent Performance and Outlook | International

Text / Tsinghua Financial Review Wang Mao

On March 19, 2026, the Federal Reserve held its policy meeting, keeping the benchmark interest rate unchanged and signaling a hawkish stance. The expectation for rate cuts this year has been reduced to one. Meanwhile, gold prices faced short-term pressure, but the medium- to long-term support logic remains unchanged. Recently, gold prices have underperformed due to market preference for USD assets as safe havens amid turmoil in the Middle East, rather than gold.

Federal Reserve Keeps Benchmark Rate as Expected

In the early hours of March 19, Beijing time, the Federal Reserve decided to keep the federal funds rate unchanged at 3.50%–3.75%, in line with market expectations. The dot plot indicates only one rate cut in 2026, but seven members expect no cuts, and another rate cut is anticipated in 2027.

Fed Chair Jerome Powell emphasized that rate cuts are not considered until inflation shows further improvement, even mentioning internal discussions about the possibility of rate hikes, though this is a non-mainstream view.

The Fed also announced an upward revision of the US GDP growth forecast for 2026 to 2.4%, and inflation projections (PCE) increased to 2.7%. The long-term neutral interest rate was raised from 3.0% to 3.1%, signaling a normalization of high interest rate environment.

Meanwhile, the Fed acknowledged high uncertainty regarding the economic impact of the Iran conflict but warned that inflation faces significant upside risks and that the pace of inflation decline may be slower than previously expected.

Current Gold Price Performance and Future Outlook

Since the outbreak of the Iran conflict, gold prices have recently underperformed. The reason is that, amid turmoil in the Middle East, markets currently prefer USD assets as safe havens rather than gold. After all, oil prices have surged, requiring USD to purchase crude oil rather than gold. Additionally, during periods of intensified geopolitical conflict, the US aims to demonstrate that USD assets are safer and more liquid.

Following the Fed meeting announcement, gold prices fell nearly 4%, dropping below $5,000 per ounce. The decline was driven by delayed rate cuts, which strengthened the dollar and US Treasury yields, increasing the cost of holding gold. Expectation of rate cuts not materializing led to a sell-off by cautious investors, and technical breakdowns further intensified selling pressure.

If the Iran conflict extends into Q2 2026, this scenario appears quite likely. During this period, gold may face further pressure because the US economy is neither too “hot” nor too “cold.” US economic growth is expected to slow to 2%–2.5%, below the previous forecast of 2.8%. Inflation could remain around 3% by the end of 2026. Under these conditions, the probability of Fed rate cuts is low, which directly weakens one of gold’s upward drivers.

If the Iran conflict extends into Q3 or the entire year, the US could experience stagflation—high inflation coupled with economic stagnation—potentially forcing the Fed to start cutting rates. Bank of America predicts that gold could break through $6,000 per ounce and rise to $6,500.

It should be noted that if US inflation remains high, real interest rates will decline, which is unfavorable for the US dollar index but beneficial for gold.

Additionally, global central banks continue to buy gold, with countries like China increasing their gold reserves, providing medium- to long-term support for gold demand. As the US dollar’s credibility weakens and de-dollarization trends accelerate, the value of gold allocations will become increasingly apparent.

Editor | Wang Mao

Review | Qin Ting

Chief Editor | Lan Yinfan