Fed's Rate Hold and Geopolitical Tensions Spark Selling Pressure in Gold Markets

The Federal Reserve's decision to keep interest rates steady, coupled with subsequent hawkish remarks, has triggered a sharp sell-off in gold markets, while geopolitical risks continue to sustain inflationary pressures. Investors are realizing profits in safe-haven assets amid concerns that the Fed is lagging in the fight against inflation, as escalating tensions in the Middle East deepen market uncertainty.

Divergent Fed Signals Cast Shadow Over Future Policy Path

Despite the Fed holding the policy rate steady within the expected 3.50-3.75% range, the bank's communication strategy and internal divisions among members are creating confusion in the markets. The limited rise in ounce gold following the decision reversed into negative territory as comments emerged.

■Statements by Fed Chair Kevin Warsh and divergences among members created uncertainty regarding future policies.

■According to pricing in money markets, the probability of a rate hike in September has retreated from 80% to 65%.

■The interpretation that the bank's failure to raise rates meant falling behind in the inflation fight weighed on equity markets.

Global and Domestic Fragility Reflected in Price Action

Driven by the decline in global ounce prices and domestic selling pressure, gram gold started the new day with a loss. Investors continue to price in both geopolitical developments and monetary policy moves.

■As of 09:30, gram gold is trading at 6,156 lira, a 0.6% decrease from the previous close.

■Quarter gold finds buyers at 10,108 lira, while the Cumhuriyet gold is at 40,274 lira.

■Ounce gold is trading at 4,037 dollars, down 0.8% in today's session.

Escalating Middle East Tensions Keep Oil and Inflation Elevated

The rising perception of geopolitical risk is pushing inflation expectations higher through commodity prices. The US military moves against Iran are taking regional tensions beyond commercial risks, threatening global financial stability.

■US President Donald Trump threatened to strike Iran "very hard" in response to attacks on US forces in Jordan.

■The US Central Command confirmed it conducted overnight strikes on military targets in Iran.

■Rising oil prices and regional tensions are increasing inflationary pressures, complicating the policies of central banks.

While the Fed's pause offers short-term liquidity relief, the perceived lack of urgency against inflation reinforces the "higher for longer" narrative. In the banking sector, commercial loan costs remain volatile amidst this uncertainty. Rising geopolitical risks will likely compel Central Banks to maintain or tighten macroprudential measures, potentially increasing financing costs for SMEs as inflation expectations become unanchored.