Gold Prices Plummet! Dollar Strength Surges on FOMC Shock

Today's Featured News

On June 18, the price of gold (XAU/USD) dropped sharply, falling to as low as $4,223.

It had risen to around $4,330 the day before, but the Federal Reserve’s outlook released after the FOMC meeting was more hawkish than market expectations, fueling dollar buying.

As a result, gold prices broke below $4,200 and entered a corrective phase.

Why did it fall?

There are three main factors behind this decline.

① FOMC outline hawkish beyond expectations

The Fed kept the policy rate at

3.50%–3.75%

However, in the dot plot that drew attention,

9 out of 19 members

projected

a rate hike within the year

.

Rather than signaling cuts, the prospect of continued rate hikes prompted stronger dollar buying.

② Probability of tightening rose sharply

Before the FOMC,

the probability of a rate hike within the year
61%

was

after the FOMC

85%

had risen.

The market was beginning to price in

a prolonged period of high interest rates

again.

Rising rates are a major headwind for gold prices.

③ Dollar index hits fresh year-to-date highs

The Dollar Index (DXY) rose to

100.81

and reached its highest level since May 2025.

When the dollar strengthens, dollar-denominated assets like gold become relatively expensive, reducing demand.

This decline is essentially

“gold selling due to a stronger dollar.”

the main cause.

Markets focus on Chair Powell’s remarks

New Fed Chair Jerome Powell stated that

“forward guidance is not appropriate in the current environment.”

He also stressed that

“price stability is the top priority.”

Markets interpret this as a hawkish stance.

Technical analysis

Gold clearly broke below $4,300.

The RSI has moved into the bearish territory, and selling remains dominant.

Upper targets

・$4,300

・$4,350

・$4,400

Lower support

・$4,023

・$4,000

Breaking below $4,200 would make the June 11 low of $4,023 the next key support.

What to watch next week

Next week features several important indicators.

Notable events

・PMI flash

・Initial jobless claims

・Q1 GDP preliminary estimate

・Core PCE (Fed-focused inflation gauge)

Depending on the results, expectations for rate hikes could strengthen further.

Summary

✅ FOMC kept rates unchanged

✅ Dot plot hawkish beyond expectations

✅ Probability of rate hikes this year rose from 61% to 85%

✅ Dollar index hit fresh year-to-date highs

✅ Gold price fell below $4,300

✅ Next focus is $4,200 resistance/support

Before the FOMC, gold stayed around the $4,300 level, but the hawkish Fed stance reversed the trend.

Going forward, whether it can hold $4,200 will be the main point of interest.

We’ll see you again in the next [Ikura. Market Report].