Gold Defies Higher Rates with Strong Rebound

Gold prices rebounded on Thursday after the Federal Reserve raised interest rates for the first time in over three years, despite expectations that higher borrowing costs would push gold lower.

The Fed's decision to raise its target range by 25 basis points to 3.75%-4% was widely anticipated, limiting the element of surprise and allowing gold to recover from a six-week low touched on Wednesday.

Spot gold climbed as much as 1.1% in early Asian trade before paring the move to around $4,295 an ounce, while December US gold futures remained weaker near $4,334.

The rebound was driven by demand outside of the US rates market, including Chinese ETF inflows and continued central-bank buying, which suggests that bullion is becoming less dependent on the traditional inverse relationship with US interest rates.

Analysts noted that softer oil prices also contributed to gold's appeal, as lower crude reduces inflation-driven rate pressure and makes it less likely for the Fed to respond aggressively with further rate hikes.