Gold Rallies on Falling Treasury Yields and Hawkish Fed Comments

Gold prices rallied as traders evaluated hawkish comments from Fed Chair Warsh and reacted to the pullback in Treasury yields.

The Federal Reserve raised the federal funds rate by 25 bps and indicated that it would raise rates again to fight inflation, proving its independence and calming down the bond market.

Falling Treasury yields provided significant support to gold markets, with the yield of 2-year Treasuries pulling back towards 4.68% and the yield of 10-year Treasuries settling below 4.95%.

Typically, rising interest rates are bearish for gold, but traders bet that the Fed will raise rates quickly and push inflation lower, keeping it under control.