Fed Rate Hike Boosts Gold Prices Amidst Economic Uncertainty

Gold prices have begun to recover from their six-week low as investors digest the Federal Reserve's recent decisions. The rebound comes on the back of a weaker US dollar and lower US Treasury yields, which are putting downward pressure on the greenback.

The Fed raised interest rates by 25 basis points to a 3.75%-4.00% range, marking the first increase in US interest rates since July 2023. The central bank also signaled further monetary tightening as it seeks to contain inflationary pressures in the United States.

Despite this hawkish tone, investors are still cautious about the economic outlook, with many monitoring further US economic data and comments from Federal Reserve officials to reassess expectations. Gold holdings at the SPDR Gold Trust increased by around 1.71 metric tons on Wednesday, marking a second consecutive daily increase.