Gold rebounds above $4,300 after Fed hike as dollar eases

Gold prices experienced a rebound above $4,300 following the Federal Reserve's decision to raise interest rates for the first time since 2023. By 04:56 ET (08:46 GMT), spot gold prices surged 1.2% to $4,314.57 per ounce, while gold futures declined 0.8% to $4,354.09 per ounce. The Federal Open Market Committee unanimously increased the federal funds rate by 0.25%, reaching the market's anticipated level.

The Fed's median projection for the policy rate by the end of 2026 rose to 4.1% from 3.8%, suggesting continued support for additional rate hikes.

Markets interpreted the Fed's guidance as hawkish, anticipating further rate increases later in 2026 and in the first half of 2027. Higher interest rates typically exert downward pressure on gold, as the precious metal does not generate interest income. Additionally, a stronger dollar can negatively impact gold prices, given that it makes the metal more costly for buyers utilizing other currencies.

Tony Sycamore, a senior market analyst at IG, noted that expectations of additional Fed rate increases and further 50 basis point hikes in the first half of 2027 had intensified the headwinds for gold. From a technical standpoint, Sycamore stated that gold requires to regain its 200-day moving average near $4,539 to indicate that the recent decline from the $4,697 high has ended and that the broader uptrend has resumed.

Until that occurs, he expects the current decline to potentially extend toward $4,200, with $4,000 representing the next significant support level.

During his post-meeting briefing, Fed Chair Kevin Warsh reiterated the central bank's concerns about inflation. He acknowledged that several categories of goods and services were still experiencing annualized price increases above 3% over both six-month and 12-month periods.