Gold recovered its September 16 drop and traded at $4,331 after the Federal Reserve's first rate hike since 2023, even as investors still expect two more increases before 2026 ends. Prediction markets and the CME FedWatch Tool point to further tightening at the October and December FOMC meetings, a trend that could keep pressuring the metal.
Gold Rebounds to $4,331 After Fed Hike
Gold has recovered the drop seen on September 16 after the Federal Reserve raised interest rates for the first time since 2023. The rate hike had pushed gold down to retest $4,200 before the metal clawed the loss back.
XAU/USD traded at $4,331 at the time of writing, according to CoinGape. Analyst Ian Cooper attributed the gain to weak confidence by traders that the rate hikes will do anything to lower interest rates, noting that "gold and markets are ignoring the FED" as the US Treasury keeps injecting liquidity through other channels.
Markets Anticipate Two More Rate Hikes in 2026
Data from CoinGape prediction markets shows 46% of investors expect the Fed to raise rates by 25 basis points at the October FOMC meeting. On the CME FedWatch Tool, 41% of investors expect rates to reach 4.25%-4.50% by the December meeting, as the Fed opens another tightening cycle.
Goldman Sachs backed the case for further hikes, noting that the Fed's rate decision was supported by all 12 members, which raises the odds of additional increases this year. The bank also tied the higher odds to a hawkish speech from Warsh.
Dollar Strength Could Cap the Rally
Further hikes remain bearish for gold. A rate increase strengthens the dollar, and because gold is priced in dollars, its value tends to drop as the currency gains ground.
Still, if markets begin pricing in an additional 50 basis points of hikes before 2026 ends, gold's rally could weaken and the price might retest the August lows of $4,000 in Q4 2026.
Source: CoinGape
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