Gold regains its luster and rises after US interest rate hike

Gold prices rebounded in Thursday’s trading, recouping some of their recent losses, supported by a decline in U.S. Treasury yields and a lull in the dollar’s rally, following the Federal Reserve’s decision the previous day to raise interest rates for the first time since 2023.

The precious metal climbed by more than 1% to trade around $4,309 per ounce, after intraday gains reached approximately 1.7% and prices approached $4,335 per ounce, ending a streak of three consecutive sessions of losses. Thursday’s trading indicated that gold regained some momentum as investors reassessed the implications of the new shift in U.S. monetary policy.

The rise in gold coincided with a drop in U.S. Treasury yields following the sharp spike seen immediately after the Fed’s decision, which alleviated some pressure on the precious metal. Gold typically faces headwinds when bond yields rise, as it is a non-yielding asset.

Analysts view Thursday’s decline in yields as a correction to the strong reaction in bond markets following the rate decision, providing support for gold. However, yields remaining at relatively high levels and the continued strength of the dollar could limit the metal’s ability to post larger gains in the near term.

In other precious metals markets, silver rose by about 1.5% to approach $64 per ounce, while both platinum and palladium also posted gains during Thursday’s trading, amid improved investor appetite for metals following the sharp volatility that followed the Fed’s decision.