Global gold prices came under heavy selling pressure, tumbling more than $130 to a new low around $4,235 before bargain hunting emerged, after the US Federal Reserve unanimously voted to raise interest rates by 0.25%, its first hike since 2023, to curb inflation that remains elevated, while leaving the door open to one more increase this year. Fed Chair Kevin Warsh said underlying inflation pressures have not clearly eased and that the hike aims to prevent energy-driven pressures from spilling over into broader goods and services prices. Markets responded to the Fed's hawkish stance, with the dollar index rising above 100, while the 10-year US Treasury yield climbed back to close around 5.01%, the highest since 2007. Global gold prices closed down $31.54, or 0.73%, at $4,263.85, with the current price around $4,307.23. The SPDR gold fund bought 1.71 tonnes the previous day and now holds 1,051.99 tonnes. For September overall it bought 9.63 tonnes, but year-to-date since January 1 it has sold a net 20.02 tonnes. Analysts at Kitco believe that although gold may weaken in the short term, the medium- to long-term trend remains upward if daily closes hold above $4,300, with a chance to retest $4,400 and $4,755. Should it fall below $4,300, the next long-term support lies around $4,010.
Fed unanimously raised the effective funds rate by 0.25%, its first hike since 2023, lifting the policy rate.
10-year Treasury yield climbed back to close around 5.01%, the highest since 2007, after the Fed's hawkish hike.
