September 17, 2026
Actually, the outlook for gold could hardly have been more unfavorable: The U.S. Federal Reserve raised interest rates for the first time in more than three years, signaled further tightening, the dollar jumped to a seven-week high, and the yield on two-year U.S. Treasury bonds reached its highest level since July 2024. But instead of coming under further pressure, the gold price rebounded sharply on Thursday—after initial losses immediately following the Fed’s decision—and nearly regained the $4,300 per ounce mark.
In Asian trading, spot gold even rose by as much as 1.1% to $4,310.49 per ounce, after the precious metal had fallen to a near six-week low on Wednesday. Silver also rebounded significantly, rising 1.4% to $63.83 per ounce. Reuters noted gold’s remarkable resilience given the challenging interest rate and dollar environment.
Fed Signals Further Rate Hikes
The Federal Reserve unanimously raised the target range for the federal funds rate by 25 basis points to 3.75–4.00% on Wednesday. At the same time, the new projections made it clear that this move should by no means be viewed as a one-time measure. Sixteen of 18 Fed officials expect at least one more rate hike by the end of the year. The median forecast for the benchmark rate at the end of 2026 rose from 3.8% in June to 4.1%.
The financial markets reacted accordingly. Following the meeting, Goldman Sachs revised its previous assessment and now expects another 25-basis-point increase as early as October. The bank refers to a base-case scenario involving two rate hikes this year. Bank of America goes even further, anticipating increases in both October and December. In the futures market, the probability of another rate hike as early as October was most recently estimated at around 50%.
For gold, this development is fundamentally a headwind. Higher interest rates increase the attractiveness of interest-bearing investments and thus raise the opportunity cost of the non-interest-bearing precious metal. This makes the rapid counter-movement all the more striking.
Gold Price Benefits from Movement at the Long End of the Yield Curve
One possible key lies in the U.S. bond market. There, different maturities are currently reacting quite differently. The yield on two-year U.S. Treasuries jumped by six basis points to 4.7145% following the Fed meeting, reaching its highest level since July 2024. The short end of the yield curve is thus clearly pricing in the prospect of further Fed rate hikes.
For longer maturities, however, the reaction has been much more moderate. The yield on 10-year U.S. Treasuries stood at 4.9917%, just below the closely watched 5% mark. The yield on 30-year Treasuries even fell by two basis points to 5.3328%. The yield curve thus flattened: While short-term yields are rising, selling pressure on long-term bonds initially eased.
This could be decisive for the price of gold. Although the market is pricing in a significantly more hawkish Fed, at the same time it seems to trust—at least for now—that the central bank will be better able to bring inflation under control with its current policy. This could limit the pressure on long-term yields and inflation expectations.
The gold rally is also noteworthy because the U.S. dollar strengthened significantly at the same time. The dollar index reached 100.33 points, its highest level since July 31. Normally, a stronger dollar creates additional headwinds for gold, as the metal—which is traded in U.S. dollars—becomes more expensive for buyers outside the dollar zone.
Falling Oil Prices Ease Inflationary Pressure
Gold is also receiving support from another source: oil prices, which had previously risen sharply, are easing again. Brent fell toward $105 per barrel on Thursday, after prices had already lost about three dollars the previous day. Additional Saudi shipments via Oman at least temporarily eased concerns about further supply disruptions in the Middle East.
For gold, this is a double-edged sword. A lower geopolitical risk premium may initially dampen demand for safe-haven assets. At the same time, however, a falling oil price means less inflationary pressure. That, in turn, could limit upward pressure on long-term U.S. yields. Market analysts therefore view a sustained decline in oil prices as a potential supportive factor for gold in the medium term. The current recovery is also attributed to the fact that a significant portion of the Fed’s hawkish signals has already been priced in.
As a result, the focus is shifting following the Fed’s decision. The fact that the Fed raised its benchmark interest rate by 25 basis points is likely to be less decisive for the price of gold. What will be more important is how much further short-term interest rate expectations will rise, whether the 10-year Treasury yield will break above 5% on a sustained basis, and how oil prices and inflation expectations develop. The fact that gold is trending back toward $4,300 despite the dollar hitting a seven-week high and a sharp rise in short-term yields shows, at the very least, that the initial interest rate shock was absorbed surprisingly quickly.
