Gold Rebounds From Five-Week Low as Fed Raises Rates

Gold recovered sharply from a five-week low as crude oil and long-term Treasury yields eased, before the Federal Reserve delivered its first interest-rate increase since 2023. The rebound highlights a market caught between tighter monetary policy and continued support from central-bank demand and geopolitical uncertainty.

By Paul Ploumis
Published September 17, 2026

MONTREAL (Scrap Monster): Gold rebounded sharply on Wednesday after dropping roughly $100 earlier in the week, as crude oil prices eased and long-term government bond yields pulled back from multi-year highs.

Dollar-denominated gold climbed from Monday’s five-week low of $4,254 per ounce to as high as $4,360 on Wednesday before giving back part of the advance.

The rebound came hours before the Federal Reserve raised its benchmark interest-rate range by 25 basis points to 3.75%–4.00%, marking the first U.S. rate increase since July 2023.

Fed Delivers First Rate Increase in Three Years

The Federal Open Market Committee voted unanimously on September 16 to increase the federal funds target range by a quarter percentage point.

The Fed said economic activity continued to expand at a solid pace but inflation remained elevated, adding that the higher policy rate was intended to support a return toward its 2% inflation objective.

The decision was widely anticipated by financial markets, limiting the initial surprise for gold.

Attention has now shifted from whether the Fed would raise rates to how much additional tightening could follow.

Federal Reserve projections and subsequent market pricing continue to point to the possibility of additional increases before the end of the year, although future decisions remain dependent on inflation and economic data.

Gold Initially Falls After Fed Decision

Gold’s pre-Fed rebound did not hold intact after the announcement.

Prices fell toward $4,315 following the decision as investors responded to the Fed’s firmer inflation stance and the prospect of additional rate increases.

The metal recovered ground again on Thursday as oil prices retreated and pressure in the longer end of the Treasury market eased.

The reaction illustrates the competing forces currently driving bullion. Higher policy rates and bond yields generally increase the opportunity cost of holding a non-yielding asset such as gold, while easing yields and renewed uncertainty can quickly restore demand.

Five Percent Treasury Yield Becomes Key Market Signal

The U.S. 10-year Treasury yield reached 5% earlier in the week, its highest level since 2007.

That move contributed to the pressure on gold because investors could obtain historically high nominal returns from government debt while holding an asset with no coupon or interest payment.

The subsequent pullback in yields helped gold recover from Monday’s five-week low.

The 5% level is also important beyond the precious-metals market because Treasury yields influence borrowing costs across mortgages, corporate debt, infrastructure investment and other financial markets.

Inflation Measures Are Sending Different Signals

The inflation backdrop remains complicated.

The U.S. Personal Consumption Expenditures price index was 3.7% higher in July than a year earlier, according to the Bureau of Economic Analysis. Core PCE, excluding food and energy, increased 3.3%.

However, the Dallas Federal Reserve’s Trimmed Mean PCE measure showed inflation running at 2.3% over the same 12-month period.

The trimmed-mean measure removes categories experiencing the largest price increases and declines each month in an effort to identify underlying inflation trends.

Fed Chair Kevin Warsh has previously highlighted trimmed inflation measures as useful gauges of underlying price pressure.

The large gap between headline PCE and trimmed-mean inflation helps explain some of the disagreement over how restrictive U.S. monetary policy needs to become.

Central-Bank Buying Continues to Support Gold

Monetary tightening is not the only force influencing gold.

Official-sector demand remains an important source of support.

The World Gold Council reported that central banks added a net 23 tonnes to global reserves in July, with China and Poland among the largest reported buyers.

Reported central-bank purchases totaled approximately 130 tonnes during the first seven months of 2026.

The pace was below the comparable period a year earlier, but continued accumulation reinforces gold’s role as a reserve-diversification asset.

World Gold Council survey data also show that reserve managers continue to view gold favorably over the longer term, despite elevated prices.

Oil Retreat Gives Bullion Some Relief

Energy prices have become another important driver of the precious-metals market.

Brent crude had climbed above $100 per barrel amid Middle East supply concerns before retreating as the week progressed.

Lower oil prices eased some near-term inflation pressure and contributed to the pullback in longer-term bond yields.

For gold, oil can work in two directions.

Higher crude prices can strengthen demand for defensive assets during periods of geopolitical uncertainty, but they can also raise inflation expectations and push bond yields higher, increasing the opportunity cost of holding bullion.

Silver Rebounds More Than 4% From Monday Low

Silver also participated in Wednesday’s precious-metals rebound.

The metal traded as high as $64.93 per ounce, more than 4% above Monday’s five-week low, before retreating later in the session.

Silver typically experiences larger percentage swings than gold because its market is smaller and because it combines monetary demand with substantial industrial consumption.

Gold Moves Higher in Euros and Sterling

The rebound was also visible outside the U.S. dollar market.

Gold priced in euros reached approximately €3,779 per ounce during Wednesday trading, while sterling-denominated bullion approached £3,240.

Those moves reinforced the broad nature of the recovery from Monday’s lows rather than indicating a move driven solely by weakness in the U.S. dollar.

Bank of England Holds at 3.75%

The Bank of England added another piece to the global monetary-policy picture on Thursday, keeping Bank Rate unchanged at 3.75%.

The Monetary Policy Committee voted 6-3 to hold rates, with three members favoring a quarter-point increase.

UK policymakers cited continued uncertainty around energy prices and inflation, highlighting the same tension now influencing monetary policy in the United States.

Bank of Japan Decision Comes Next

The next major central-bank event for precious-metals and currency markets is the Bank of Japan’s September 18 policy decision.

Markets broadly expect another increase in Japanese interest rates, although the pace of future tightening remains uncertain.

A Bank of Japan move could affect the yen, global bond yields and broader currency markets, giving gold traders another monetary-policy event to absorb before the end of the week.

What Matters for Gold Now

The gold market has moved beyond the question of whether the Federal Reserve would raise rates in September. The issue now is how persistent inflation proves to be and how far policymakers ultimately need to tighten.

The near-term balance remains difficult.

Higher policy rates and elevated real yields are a headwind for bullion. At the same time, central-bank purchases, geopolitical risk and uncertainty surrounding energy markets continue to provide underlying support.

Wednesday’s rebound from $4,254 to $4,360 demonstrated that buyers remain willing to step in after sharp declines, but the post-Fed pullback also showed that the market remains highly sensitive to interest-rate expectations.

Market Read

The latest move does not point to a simple return to a rising gold trend.

Instead, bullion is trading between two powerful forces: increasingly restrictive monetary policy on one side and persistent official-sector and defensive demand on the other.

If Treasury yields remain elevated and the Fed signals additional tightening, gold could continue to face resistance on rallies. Conversely, further declines in oil and longer-term yields, renewed geopolitical stress or stronger reserve buying could keep physical and investment demand supported.

The result is likely to remain a volatile market in which moves in bond yields are as important as moves in the gold price itself.