Warsh's Hawkish Tone Threatens Gold's $4,000 Truce

Gold prices held steady at around $4,029 an ounce on Wednesday as investors waited for the Federal Reserve's decision on interest rates. The Fed statement is due at 2 pm ET, and Chair Kevin Warsh will speak 30 minutes later. Traders are concerned about a hawkish tone from Warsh that could lift Treasury yields and the dollar, pushing gold below $4,000.

The market is pricing in a 68% probability of no change in interest rates and a 32% chance of a quarter-point increase. However, traders see a 77% likelihood of a rate hike by September. This uncertainty has left gold vulnerable to either direction.

Bullion analyst Kelvin Wong said that gold would likely need a less hawkish message from the Fed to reverse its recent bearish bias. A hold accompanied by a warning that rates may rise soon could still limit any relief rally for gold.