Fed Hike Triggers Short-Term Pressure on Gold, Analysts Say Long-Term Outlook Remains Positive

The Federal Reserve raised interest rates for the first time since 2023, leading to a decline in gold and silver prices. The central bank's decision was widely expected, with markets pricing in a 90% chance of a 25-basis-point hike. However, updated rate projections from policymakers showed a more hawkish tilt, pushing the dollar and Treasury yields higher.

Fed Chair Kevin Warsh emphasized that inflation remains too high, and markets interpreted the decision as the start of a new sustained tightening cycle. As a result, precious metals gave up their pre-Fed relief bounce and turned lower in late-afternoon trading.

Gold pulled back toward support around $4,257.42 an ounce and remains below resistance at $4,313.67 an ounce. Silver broke below its pivot level of $63.3172 an ounce and is testing support near $62.1558 an ounce.

Alex Kuptsikevich, Chief Market Analyst at FxPro, noted that the rate hike is imposing mostly short-term sentiment pressure on gold, with limited long-term impact. He argued that a Fed tightening cycle with the possibility of another hike this year should stabilize the U.S. dollar and ease concerns about runaway long-term inflation.