Gold Prices Surge Over 2% to Reclaim $4,100 Mark. Fed Chair Walsh Says Inflation Risks Have Receded, Easing Rate Hike Expectations to Restore Gold's Upward Momentum.

TradingKey - On July 1, Eastern Time, gold ( XAUUSD) at one point surged past $4,100, returning to a near one-week high. As of press time, it was up 2.27%, trading at $4,098 per ounce. The newly appointed Fed Chair Kevin Warsh said on Wednesday that inflation expectations and inflation risks have both declined in recent weeks.

[Source: TradingView]

Warsh stated that inflation expectations and inflation risks have declined in recent weeks, and the Federal Reserve is committed to bringing inflation down to its 2% target. He noted, "In the first few weeks of this period, inflation expectations have fallen back, and inflation risks have decreased accordingly."

He continued, "If anyone in households, the business community, or financial markets believes the Fed will be comfortable with an inflation target higher than 2%—then, I'm afraid they will be disappointed: we will ensure price stability in the United States."

Regarding interest rate decisions, Warsh sidestepped questions on whether the Fed might raise rates at its July meeting. He indicated that when they meet in four weeks, they will be able to have a full "family debate," but beyond that, there was no more information to share.

On the geopolitical front, U.S. President Donald Trump told the media that current U.S. talks with Iran in Qatar are progressing well. According to sources, the U.S. and Iran held indirect talks on July 1 in Doha, the capital of Qatar, with Qatar and Pakistan serving as mediators. The talks focused on implementing the U.S.-Iran memorandum of understanding, with discussions covering topics such as the unfreezing of Iranian assets and ensuring maritime security in the Strait of Hormuz.

In terms of gold price forecasts, TD Securities stated that gold prices could fall below the $3,900 threshold before bottoming out, but this correction would represent a strategic buying opportunity.

The firm noted that the current bearish correction has not yet bottomed, with the biggest near-term threat coming from inflationary pressures triggered by rising oil prices. It warned that Brent crude remains on track to enter the $90 to $110 per barrel range, which would reinforce the Fed's tightening stance and raise the holding cost of gold.