Fed rate hike affects gold prices

The impact of the Federal Reserve's bold decision to raise interest rates by a quarter of a point on gold prices was significant, as the precious metal's price increased by approximately 1.3% to around $4,320 per ounce after a three-day decline. Meanwhile, U.S. Treasury yields fell, having jumped to their highest levels since 2024. Although raising interest rates typically reduces the appeal of gold as a safe haven against inflation, market reactions depend on expectations for future interest rates and inflation levels. In 2026, gold prices experienced sharp fluctuations, swinging between over $5,500 and $4,275 per ounce. The rise in interest rates influences gold largely through the strengthening of the dollar, making the metal more expensive for buyers using other currencies. However, this is not the only factor affecting gold prices, which are also influenced by inflation, supply and demand, and geopolitical situations. It is expected that pressure on gold prices will continue in the near future.

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