Gold Rebounds After Fed Hike, Hits Weekly High of $4,400.60

Gold prices rebounded during a wild week, as an early selloff driven by surging oil prices, near-5% Treasury yields, and expectations for a Federal Reserve rate hike gave way to a sharp recovery after the hike was delivered and oil and yield pressure eased.

Spot gold kicked off the week trading at $4,340 per ounce on Sunday evening, and that yellow metal quickly came under pressure as traders priced in stronger inflation risks from higher crude prices and renewed U.S.-Iran tensions.

The selling accelerated through Monday and Tuesday, with gold dropping to a more than one-month low near $4,279.30 per ounce on Tuesday as markets treated this week’s Fed hike as increasingly locked in.

Gold attempted to stabilize Wednesday ahead of the Fed decision, but the rebound failed after the FOMC voted 12-0 to raise rates by 25 basis points to a 3.75% to 4.00% target range, while the updated projections showed 16 of 18 policymakers still expected another hike before year-end.

Spot gold fell back after the announcement and set its weekly low near $4,261.80 per ounce on Wednesday afternoon.

The yellow metal recovered Thursday as lower crude oil prices, a softer U.S. dollar, and easing Treasury yields helped traders unwind some of the post-Fed pressure.

Friday saw the rally extended as oil prices fell for a third straight session and yields moved back from the week’s highs, allowing gold to climb to its weekly high of $4,400.60 per ounce.