Gold Soars 2% as Fed Holds Rates Steady Amid Inflation Concerns

Gold prices surged 2% on Wednesday after the US Federal Reserve kept interest rates steady. The decision came despite elevated inflation readings, sparking questions about how the central bank will achieve its 2% target. Chairman Kevin Warsh emphasized that the Fed has no higher 'soft target' for inflation and is committed to meeting this goal.

The dollar fell against the euro after the rate decision, making gold cheaper for overseas buyers. Spot gold prices rose to a one-week high of $4,116.26 per ounce before settling at $4,101.99. US gold futures for August closed around 0.1% lower at $4,036.30.

Independent metals trader Tai Wong attributed the rally in precious metals to the relief after the Fed's decision. He noted that Warsh's comments were 'sophisticated and fairly complex,' which may lead the market to change its mind upon further reflection.