Gold Rebounds to $4,380 After Fed Hikes Fail to Suppress Demand
Gold prices recovered to $4,380 despite a 25-basis-point Fed hike. Falling oil prices and lower bond yields drove the rebound.
Key points
- Gold rebounded to $4,380 after a 25-basis-point Fed rate hike to 4.00%. This recovery followed a drop to a six-week low.
- Brent crude fell to $98.46 as Saudi pipeline flows resumed, pushing the 10-year US Treasury yield down to 4.93%.
- US gold ETFs shed 61 metric tons in H1 2026, while physical bar and coin purchases hit 1,200 metric tons in 2025.
Gold recovered to $4,380 per ounce after the Federal Reserve raised rates by 25 basis points. This move followed the European Central Bank and Bank of Japan tightening their policies.
The Fed’s target range now stands at 3.75% to 4.00%, its first increase since July 2023. Gold initially dropped to a six-week low before climbing 2% to a one-week high.
Oil prices drive the recovery
Brent crude fell to $98.46 after Saudi Arabia restored East-West pipeline flows. Lower energy costs reduced inflation pressure, helping bond yields drop from above 5% to 4.93%.
Tim Waterer of KCM Trade says gold needs lower oil or yields to reach $4,580. The current trading range sits between $4,200 and $4,580 depending on macro data.
ETF outflows signal shifting demand
US gold exchange-traded funds lost 61 metric tons in the first half of 2026. This marks the second-largest first-half outflow by value on record, reflecting higher holding costs.
Physical buyers purchased 1,200 metric tons of bars and coins in 2025. Crux Investor notes that dealer trust remains critical as institutional fund flows weaken.
Market odds favor further hikes
Futures markets price a 60% probability of another Fed hike on October 28. Sixteen of eighteen officials currently target at least one more rate increase this year.
Gold remains 22% below its January record of $5,589.38. A close above $4,580 after an October hike would prove demand overcomes rate pressure.
