Gold Defies Higher Rates with Unexpected Rally

Gold prices rebounded on Thursday after the Federal Reserve raised interest rates for the first time in over three years. Despite the dollar reaching a seven-week high, gold prices rose as much as 1.1% to $4,295 an ounce before paring the move.

The Fed's decision to raise its target range by 25 basis points to 3.75%-4% was largely anticipated, limiting the element of surprise. However, updated projections showed that 16 of 18 policymakers expect at least one more rate increase this year, with a median forecast pointing to a 4%-4.25% range by December.

According to CMC Markets analyst Laurence Booth, gold's resilience reflects demand outside the US rates trade, including Chinese ETF inflows and continued central-bank buying.

The recent oil surge had reinforced expectations that inflation would remain sticky, forcing Treasury yields higher. However, Brent crude extended its retreat towards $105 a barrel after reports of additional Saudi Arabian exports through Oman, easing concern over disrupted supplies.