Gold Bounces Back as Traders Unwind Bearish Positions After Fed Rate Hike
Gold prices rose 1.2% to $4,312.05 per ounce on September 17 after the Federal Reserve raised interest rates, showing that gold can gain during tightening when traders unwind bearish positions.
Independent analyst Ross Norman attributed the rebound to traders closing positions placed before the widely anticipated hike, indicating the prior decline reflected positioning rather than weaker demand for gold.
A softer dollar and lower oil prices also supported gold, as XS.com analyst Linh Tran said energy-led inflation preserves its hedge value because rate hikes cannot directly resolve supply shocks.
However, trust concerns still constrain physical bullion demand, but the World Gold Council's new dealer standard could help buyers identify lower-risk dealers and increase trust in the market.