Gold Recovers, But Is the Pressure Over?

Gold prices strengthened again during Thursday's trading (Sept 17) after briefly touching a six-week low. Spot gold rose approximately 0.8% to the US$4,295 per troy ounce range as investors began buying at lower prices following the sharp sell-off that occurred after the FOMC meeting.

Earlier, the Federal Reserve raised interest rates by 25 basis points to a range of 3.75%–4.00%. Fed official Kevin Warsh also emphasized that inflation remains too high, while the majority of officials signaled the possibility of further rate hikes before the end of 2026.

The Fed's hawkish stance pushed the dollar index toward a seven-week high and drove the yield on two-year US Treasury notes up to around 4.72%. These conditions continue to act as a headwind for gold; a stronger dollar makes the precious metal more expensive for buyers using other currencies, while rising yields increase the appeal of interest-bearing assets. Reuters

Nevertheless, the easing of oil price increases provided support for gold. The restoration of Saudi Arabian supply lines alleviated concerns regarding higher energy-driven inflation. Meanwhile, the US-Iran conflict and tensions in the Middle East continue to sustain demand for gold as a safe-haven asset.

Fundamentally, gold's rebound faces a continued test as long as the dollar and Treasury yields remain elevated. Future price movements will be influenced by expectations regarding Fed rate hikes, US inflation data, and geopolitical developments. If pressure from the dollar subsides, gold could continue its recovery, though signals of further monetary tightening could once again cap its gains.