Fed Holds Rates Amid Hawkish Dissent

The Federal Reserve maintained its target interest rate at 3.50%-3.75%, but the decision revealed a significant internal division. Three officials dissented from the hold, voting instead for an immediate 25-basis-point rate hike, marking one of the most divided votes for a new Fed chair since the 1970s. This hawkish split occurred as Fed Chair Warsh reiterated a commitment to returning inflation to the central bank's 2% target.

Weaker Dollar Lifts Precious Metals Post-Fed

Following the Federal Reserve's announcement, the US Dollar fell sharply against other major currencies despite the hawkish undertones of the decision. This broad dollar weakness provided a tailwind for precious metals, helping gold prices rebound to near the $4,100 level. Silver prices also held firm, clinging to gains above $57 as the weaker dollar environment provided support.

Rising Geopolitical Risk in the Middle East

Tensions escalated in the Middle East, contributing to market uncertainty and a flight to safety. The US President stated an intention to order heavy retaliatory strikes on Iran, adding to regional instability. Separately, reports indicated that Yemen's Houthi rebels are considering imposing fees on commercial ships in the Red Sea, which could further disrupt global trade routes.