Gold rebounds as dollar eases after Fed’s first rate hike since 2023

Gold prices climbed on Thursday, recovering from a near six-week low hit a day earlier after the Federal Reserve delivered its first interest rate increase since 2023. The rebound came as the U.S. dollar eased from a seven-week high and oil prices pulled back, offering some relief to the non-yielding metal.

Spot gold traded around $4,310-$4,332 per ounce in Thursday's session, according to Reuters and FXStreet, after falling to as low as $4,235 on Wednesday when the Fed's hawkish messaging sent the dollar and Treasury yields sharply higher.fxstreet+1

The Fed's Hawkish Pivot

The Federal Open Market Committee voted unanimously on Wednesday to raise the federal funds rate by 25 basis points to a range of 3.75%-4.00%, a move widely expected by markets after inflation data surprised to the upside over the summer. The decision marked the first rate increase under Fed Chairman Kevin Warsh, who took the helm earlier this year.cnbc+1

Warsh struck a hawkish tone in his post-meeting press conference, saying inflation remains "too high" and describing the hike as removing "a dose of accommodation". The updated dot plot showed 16 of 18 policymakers expect at least one more quarter-point increase before year-end. President Donald Trump quickly criticized the move, demanding rates be lowered to 1% or less, though he did not name Warsh directly.reuters+2

Dollar Softens, Oil Retreats

Thursday's gold recovery was driven largely by a pullback in the U.S. Dollar Index, which eased to around 100.20 after climbing to its highest level since late July. The benchmark 10-year Treasury yield held near 4.98%, below the 5.04% level touched earlier in the week — its highest since 2007.tradingpedia+1

Oil prices also retreated, with WTI crude falling from Tuesday's four-month high near $106.71 to around $101.70, after Bloomberg reported that Saudi Arabia is working to restore capacity on a pipeline damaged by Houthi attacks. The decline in energy prices eased some inflation concerns that had been supporting the dollar.investing

Upside Remains Capped

Analysts cautioned that the rally may be limited. "Oil prices remain a key factor to watch. If oil prices continue to decline, that could support gold prices moving higher, at least from a medium-term perspective. Until that materializes, I expect gold to remain range-bound," said Kelvin Wong, senior market analyst at OANDA. Futures markets are pricing in nearly three additional 25-basis-point hikes by January 2028, well above the Fed's own median projection of just one more increase.reuters+1

With the Bank of England set to announce its rate decision on Thursday and the Bank of Japan meeting on Friday, markets remain on alert for further hawkish signals from global central banks.investing