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Source: Newsmaker.id
Gold prices strengthened again during Thursday's trading (Sept. 17) after facing pressure for three consecutive sessions following the Federal Reserve's decision to raise interest rates. Spot gold rose as much as 1.7%, nearing the US$4,335 per troy ounce level, before trading around US$4,309.11 per troy ounce. This positive movement occurred alongside a decline in Treasury yields and market stabilization following the Fed's decision.
Gold's rise followed a correction in US bond yields, which had previously surged. The drop in Treasury yields provided room for gold to strengthen, as the precious metal does not pay interest and is typically less attractive when yields rise. Easing pressure from the bond market helped investors view gold once again as a hedge asset.
The Fed's decision to raise interest rates by 25 basis points had largely been anticipated by the market. However, investor attention focused on signals regarding future policy after the US central bank stated that inflation remains a primary challenge. The latest projections indicate that the interest rate at the end of 2026 is expected to be around 4.1%, higher than the previous forecast of 3.8%.
Inflationary pressures stemming from rising energy prices and uncertainty caused by conflict in the Middle East are factors keeping the Fed cautious. Fed Chair Kevin Warsh emphasized that several categories of goods and services are still recording annual price increases above 3%, leaving the door open for further rate hikes.
Meanwhile, the US dollar began to weaken after initially strengthening following the Fed's decision. The dollar index fell by approximately 0.1% after recording a 0.5% gain in the previous session. Beyond gold, other precious metals also strengthened; silver rose 1.5% to around US$63.94 per ounce, while platinum and palladium also saw positive movement.
Newsmaker Analysis: Gold's strengthening following the Fed's decision indicates that the market is beginning to adjust after previously focusing too heavily on the impact of the interest rate hike. In the short term, gold continues to face headwinds from potential further interest rate hikes, a persistently strong dollar, and high Treasury yields. However, a combination of a weakening dollar, a yield correction, and rising geopolitical uncertainty could support gold in maintaining its upward momentum. (arl)
Source: Newsmaker.id