Gold Rallies 2% on Fed Rate Hike as Oil Prices Plummet

Gold prices surged 2% to $4,364.29 per ounce on Thursday, rebounding from their lowest level in nearly six weeks, as investors weighed the implications of the Federal Reserve's rate hike and its effects on monetary policy.

The rally was driven by a decline in oil prices and a weaker U.S. dollar, making gold less expensive for holders of other currencies. The metal is inversely correlated with energy prices, explained David Meger, director of metals trading at High Ridge Futures, as falling energy prices ease inflationary pressures.

Meanwhile, the U.S. Treasury yield fell, which typically diminishes gold's appeal compared to risk-free government bonds that generate income. However, global central bank activity may support gold in the long term, despite near-term volatility.