Gold rises as US treasuries pare losses following Fed rate hike

Gold pushed higher – after a three-day decline – as US Treasuries clawed back some losses following the Federal Reserve’s first interest-rate hike since 2023.

Bullion rose as much as 1.3% to near $4 320 an ounce, before paring gains. Treasury yields cooled, after spiking to the highest since 2024 in the wake of the Fed’s unanimous decision Wednesday to raise rates by a quarter percentage point. Thursday’s retreat lifted some pressure on gold, which usually performs worse when bond yields are high because it doesn’t pay interest.

Yields “are correcting from the overreaction” in the previous session, said Christopher Wong, strategist at Oversea-Chinese Banking Corp. That in turn has helped to support gold, he said, although “elevated yields and a firmer US dollar may continue to cap gold in the near term.”

The Fed rate hike had been widely anticipated — and largely priced in — as rising energy prices added to inflationary pressure from the war in the Middle East. Data released last week showed core US inflation rose at a hotter-than-expected pace in August.

The central bank’s median outlook for rates at the end of 2026 was 4.1%, up from 3.8% earlier, also indicating support for more hikes. Fed Chair Kevin Warsh, meanwhile, used his post-decision briefing to reaffirm the threat posed by inflation, saying too many categories of products and services were showing annualised price gains above 3% on a 6- and 12-month basis.

The rate hike appeared to defy the wishes of President Donald Trump, who recently threatened to escalate his trade wars if the Fed didn’t drop rates. He said on social media that interest rates should be 1% or lower, but stopped short of calling out Warsh.

Spot gold rose 0.5% to $4 283.54 an ounce at 10:48 a.m. in Singapore. Silver climbed 0.7% to $63.40 an ounce. Platinum and palladium also advanced. The Bloomberg Dollar Spot Index, a gauge of the US currency, was 0.1% higher after rising 0.5% on Wednesday.