Gold steadies as traders weigh inflation risks against Fed rate hike fallout

Gold has a well-earned reputation for being difficult to predict, and the days following the Federal Reserve’s September 16 rate decision did nothing to change that. The Fed raised its benchmark federal funds rate by 25 basis points, pushing the target range to 3.75–4.00%, and gold’s immediate response was to fall. Then, almost immediately, it changed its mind. The metal dropped to a near six-week low of $4,235 per ounce right after the announcement, only to rebound almost 2% the following session, climbing back to roughly $4,340 as Treasury yields eased and oil prices pulled back. What the Fed actually said The rate hike was unanimous, which in Fed terms is about as decisive as it gets. Chair Kevin Warsh framed the decision in direct terms, stating that “inflation is too high and has been for too long.” The Fed’s updated projections added fuel to the fire. The committee signaled at least one more rate increase before the end of 2026 and raised its median inflation forecast, measured by the Personal Consumption Expenditures index, to 3.7%. This hike was the first in three years, which is worth pausing on. The inflation data that set the stage August’s Consumer Price Index print did...