Bullion was up nearly 2% on the session at its high. By late afternoon it was down 0.78%, and silver had reversed just as hard.
Gold futures traded as high as $4,413.10 an ounce on Wednesday before reversing to $4,299.10 by around 3:45 p.m. Eastern, down 0.78% against Tuesday's $4,332.80 settlement and roughly $114 below the session peak. The session low of $4,274.70 came after the reversal, not before it.
Silver followed the same shape, reaching $65.465 an ounce before falling to $63.31, down 0.86% from Tuesday's $63.856.
The reversal is more informative than the rally
The morning bid was ordinary. Buying protection into a scheduled central bank announcement is standard behavior, and metals firmed alongside a broadly higher equity tape in the hours before 2:00 p.m.
What broke it was not the rate decision. It was what came after. The Federal Reserve raised rates by a quarter point to 3.75% to 4.00%, and its projections showed 16 of 18 officials expecting at least one further increase this year. Chair Kevin Warsh then told reporters that "the plain fact is that inflation is too high and has been for too long" and that the Committee's "predominant focus is on the price stability side of our mandate."
Gold responds to real rates, not nominal ones. A Fed willing to keep raising nominal rates until inflation demonstrably turns is, by construction, a Fed pushing real rates higher. That is the mechanism that took roughly $114 out of the gold price in about an hour.
The dollar did the rest. The dollar index rose 0.35% to 99.968 and touched 100.06, and a stronger dollar mechanically pressures dollar-priced metals.
The volatility market woke up too
The VIX traded as low as 16.53 during the morning and as high as 18.94 after the decision, sitting around 17.89 in the late afternoon, up 4.01% from Tuesday's 17.20 close.
That combination, metals reversing and volatility rising, is a cleaner signal than either alone. The market that spent the morning hedging a known event spent the afternoon repricing an unknown one: how far this tightening cycle now runs.
What would put a bid back under metals
Evidence that the Committee's projected path is too aggressive. That would most plausibly come from the labor market, and the first opportunity is Thursday's weekly jobless claims. Absent that, the setup for bullion is a central bank that has told investors it intends to keep raising nominal rates while inflation stays above target, which is the least favorable real-rate configuration for a non-yielding asset.
## EQUITY MARKETS