Fed Hike Jolts Gold Before Oil Retreat Fuels a Sharp Rebound

Happy Friday, traders. Welcome to our weekly market wrap, where we take a look back at these last five trading days with a focus on the market news, economic data, and headlines that had the most impact on gold prices and other key correlated assets—and may continue to in the future.

Gold took a more volatile path than expected but rebounded from a post-FOMC low near $4,260/oz to trade just above $4,350/oz shortly after the US market open on Friday, putting the yellow metal in position for a moderate weekly gain.

The Federal Reserve delivered the week's main event on Wednesday, unanimously raising policy rates by 25 basis points. Gold's sharp initial drop appeared tied less to the hike itself than to projections showing elevated inflation expectations and another 25-basis-point increase before the end of 2026.

Thursday brought the countermove as crude oil slid back toward and then below $100 per barrel, US Treasury yields eased, and gold recovered to around $4,360/oz. The Bank of Japan's overnight rate hike to 1.25% added another tailwind into Friday.

Next week's macroeconomic calendar is relatively light, leaving public comments from key FOMC participants and any renewed moves in oil, Treasury yields, and the US Dollar as important catalysts to watch.

Gold prices have had a more volatile go this week than was expected, even with most global markets focused squarely on the anticipation and then reaction to a consequential FOMC meeting and policy decision. Where analysts were generally preparing for another consecutive weekly loss for the yellow metal—or, at best, a relatively flat run in the event that the expected-and-delivered rate hike was fully priced in—shortly after the US market open on Friday, gold trades just above $4,350/oz and looks poised to close with a moderate gain compared to Sunday night.

Fed Hikes Rates as Projections Point to More Tightening

At the close of the September FOMC meeting on Wednesday, the Federal Reserve announced a 25-basis-point hike in policy interest rates. The hike was unanimously agreed upon by voting members of the committee and is the US central bank's first hike since 2023. Given recent inflation data that has shown price pressures to be stubbornly elevated and the state of the global oil market, which implies further price increases worldwide, financial markets on Monday already implied a greater than 80% likelihood of a hike this week. With the recent slides in gold spot pricing, it was expected that the negative impact of higher rates on non-yielding assets was already priced into gold's current market value to some extent.