Gold (XAU/USD) and Silver (XAG/USD) both rebounded on Thursday, supported by a pullback in Oil prices and a slight easing in US Treasury yields, following the Federal Reserve's latest monetary policy announcement. Gold traded around $4,332, up 1.60% on the day, while Silver traded at $64.15, up 1.87% on the day [1][2]. The decline in Oil prices helped reduce concerns about inflationary pressures, which in turn provided a more favorable environment for non-yielding precious metals like Gold and Silver [2].
The Federal Reserve raised its benchmark interest rate by 25 basis points to a target range of 3.75%-4.00%, marking its first rate hike since 2023 [1][2]. Fed Chair Kevin Warsh emphasized that inflation remains too high and described the hike as removing 'a dose of accommodation,' with the view 'widely shared across the Committee,' suggesting further rate increases may be forthcoming [1]. The updated dot plot showed that 16 of 18 Fed policymakers expect at least one more quarter-point increase by the end of the year, with the median projection pointing to a policy rate of 4.1% [1]. Money markets currently price in around a 55% chance of another rate hike at the October meeting, according to the CME FedWatch tool [2].
Following the Fed's decision, Gold reversed its intraday gains as the US Dollar and Treasury yields moved higher, pushing XAU/USD to $4,235, its lowest level since August 7 [1]. The US Dollar Index (DXY) trades around 100.20, down 0.10% on the day, while the benchmark 10-year US Treasury yield holds near 4.98%, below the 5.04% level touched earlier this week, its highest since 2007 [1]. For Silver, the prospect of softer price pressures from declining Oil prices could limit the upside in bond yields, but tighter US monetary policy continues to constrain its recovery [2].
Geopolitical developments in the Middle East remain in focus, with US President Donald Trump stating that Washington is 'hopefully' nearing the end of the Iran war, though tensions persist as Saudi Arabia and Iran-backed Houthis trade strikes [1]. Technical analysis for Gold shows XAU/USD facing resistance at the 100-day Simple Moving Average (SMA) at $4,323, with the spot price holding above the 50-day SMA at $4,283, indicating short-term consolidation below medium-term trend resistance [1].
CONCLUSION
Gold and Silver have rebounded amid easing Oil prices and a slight dip in Treasury yields, but their upside remains capped by the Federal Reserve's hawkish outlook and the prospect of further rate hikes. Market sentiment is cautious, with non-yielding assets facing continued pressure from higher interest rates and persistent inflation concerns. Investors are closely watching Fed policy signals and geopolitical developments for further direction.