(Bloomberg) -- Gold declined for a sixth day, its longest losing streak since late 2024, as Federal Reserve Chair Jerome Powell said higher energy prices will push up overall inflation.

Bond yields and the dollar extended gains as Powell said it’s important to keep interest rates mildly restrictive, while traders scaled back their expectations for a reduction this year. That sent bullion down by 3% as it’s priced in the US currency and typically performs well in a lower-rate environment.

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In a widely expected move, Fed officials left interest rates unchanged and continued to forecast one rate cut this year as they acknowledged increased uncertainty due to war in the Middle East. The committee said it’s “attentive to the risks of both sides of its dual mandate” to maximize employment and keep prices stable.

“Powell has somewhat walked back the statement which weren’t as hawkish as feared, but focusing on the dual mandate keeping rates restrictive for longer,” said Nicky Shiels, head of metals strategy at MKS PAMP SA. “That’s no help after a much larger washout earlier today which has hurt some confidence.”

Bullion earlier tumbled as much as 3.4% to reach its lowest level in more than a month as surging energy prices and a hotter-than-expected inflation report added to speculation that the Fed will hold off on cutting interest rates this year.

Crude rallied on signs of escalation in the Iran war that put more energy supplies at risk. The latest development in the Middle East conflict led to a selloff across risk assets, including equities, which forced some investors to sell their gold holdings to raise cash.

It “looks like a cross-asset repositioning,” said Ewa Manthey, a commodity strategist at ING Bank. “Oil is reacting to supply risk, while gold’s dip could be some profit-taking and broader liquidation alongside the risk selloff and firmer dollar and real yields.”

A report on US February producer prices showed increases that were bigger than economists estimated.

While bullion has been weighed down in recent weeks over concerns that rates will stay steady, gold is still up more than 10% this year. Prices have been boosted by geopolitical risks and by threats to the Fed’s independence that are supporting demand.

Concerns about stagflation — a combination of slower growth and high inflation — could be supportive of bullion in the longer term as investors look for alternative stores of value.

Spot gold fell 3.2% to $4,843.53 an ounce by 3:58 p.m. in New York. Silver lost 4.3% to $75.90 an ounce. Platinum and palladium also retreated. The Bloomberg Dollar Spot Index rose 0.5%.

--With assistance from Preeti Soni, Yihui Xie and Jack Ryan.

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