Gold rose on Thursday, regaining losses triggered by the US Federal Reserve's first interest-rate increase since summer 2023 and bringing prices back near the level seen before the central bank's monetary-policy announcement.
An ounce of gold traded around $4,327 in London on Thursday morning, about 1.5% higher than late Wednesday evening. The price remained only slightly below the pre-decision level, after having dipped nearly $100 to approximately $4,235 in the immediate aftermath of the Fed's vote.
On Wednesday night, the unanimous rate hike initially weighed on gold, which typically suffers when bond yields climb because the metal pays no interest. But a reversal in US Treasury yields overnight helped underpin prices again.
Analysts attributed gold's recovery partly to the decline in Treasuries yields, which had risen following the Fed's decision but came down again Thursday morning. Christopher Wong, strategist at Oversea-Chinese Banking Corp, said there had been an "overreaction" in Treasury yields after the rate increase, and noted that while the recent decline supported gold, the still-elevated yield level will likely remain a headwind going forward.
