Gold Surges as Oil Prices Slide, Treasury Yields Cool

Gold prices surged on Thursday, rising as much as 2.8% to exceed $4,380 an ounce, as oil prices continued their downward trend. The rally in gold was accompanied by a decline in Treasury yields, which had spiked after the Federal Reserve's interest-rate hike announcement.

The Fed's decision to raise rates by a quarter percentage point was expected, but Chairman Kevin Warsh's comments on inflation drove up market-implied expectations for future rate increases. Strategist Christopher Wong noted that Treasury yields are correcting from an 'overreaction' in the previous session, which has helped support gold.

However, the Fed's signaling of higher rates for longer remains a near-term headwind for gold, according to Giovanni Staunovo, strategist at UBS Group AG. He added that rising fiscal deficits and higher debt burdens will eventually weaken the US dollar and support gold prices.