Gold prices recovered on Thursday, moving back toward the $4,300 per ounce level after the Federal Reserve raised interest rates for the first time in three years.
The rebound came despite a relatively hawkish Fed outlook, while a modest pullback in the U.S. dollar provided some support for precious metals.
At 01:42 ET, spot gold rose 0.7% to around $4,295 an ounce. Gold futures traded near $4,333.
Silver also advanced, while platinum posted gains during the session.
Fed Raises Interest Rates by 25 Basis Points
The Federal Open Market Committee unanimously approved a 25-basis-point interest rate increase on Wednesday.
The move was widely expected by financial markets.
However, the Fed also signaled that monetary policy could become even tighter before the end of the year.
The central bank’s median projection for the federal funds rate at the end of 2026 increased to 4.1% from the previous estimate of 3.8%.
That shift suggested policymakers remain concerned about inflation and could support additional rate hikes.
Hawkish Fed Outlook Pressures Gold
Higher interest rates are generally considered negative for gold.
Unlike bonds and other interest-bearing assets, gold does not generate income. As a result, higher rates can increase the opportunity cost of holding the precious metal.
A stronger U.S. dollar can also weigh on gold prices because bullion becomes more expensive for buyers using other currencies.
Following the Fed decision, the dollar initially strengthened as investors reacted to the possibility of further monetary tightening.
However, the greenback eased slightly on Thursday, helping gold recover some of its recent losses.
Gold Technical Outlook Remains Challenging
Despite Thursday’s rebound, gold continues to face technical pressure.
Tony Sycamore, senior market analyst at IG, said expectations for another Fed rate increase this year have increased the headwinds facing bullion.
Markets are also considering the possibility of additional rate increases during the first half of 2027.
From a technical perspective, gold may need to move back above its 200-day moving average near $4,539 to strengthen the case that the recent pullback has ended.
A sustained break above that level could improve the outlook for the broader uptrend.
Key Gold Support Levels in Focus
Until gold reclaims its 200-day moving average, downside risks remain.
The $4,200 area represents an important support zone for XAU/USD.
If selling pressure increases, the $4,000 level could become the next major area watched by traders.
On the upside, a recovery toward $4,539 could become an important technical test.
Gold previously reached a high near $4,697 before entering its recent correction.
Warsh Keeps Focus on Inflation
Federal Reserve Chair Kevin Warsh reinforced the central bank’s concerns about persistent inflation following the policy meeting.
Warsh noted that many categories of goods and services continue to record annualized price increases above 3%.
Persistent inflation could encourage the Fed to maintain a restrictive monetary policy stance for longer.
That outlook remains a key risk for gold, particularly if expectations for additional rate hikes continue to rise.
Gold Traders Watch Dollar and Fed Expectations
The short-term direction of gold is likely to remain closely linked to Federal Reserve policy, U.S. inflation data and movements in the dollar.
A weaker dollar could provide further support for bullion.
However, rising interest-rate expectations may continue to limit the upside if investors become more confident that the Fed will tighten monetary policy again before the end of the year.
For now, traders are watching whether gold can hold above the $4,200-$4,300 region and build enough momentum to challenge higher resistance levels.
