Fed Shock Fades and Hormuz Risk Builds
Gold and silver prices pushed sharply higher Friday as precious metals traders began looking past this week’s Federal Reserve rate hike. Falling oil prices and retreating Treasury yields helped fuel the rebound. However, the Strait of Hormuz remains a dangerous wildcard for bullion markets.
Spot gold climbed about 0.7% to $4,372 an ounce Friday morning. Meanwhile, silver jumped more than 2% to roughly $66.70. That put gold on course for its first weekly gain in four weeks. Silver also headed toward a weekly advance.
The move marks a dramatic reversal from Wednesday’s post-Fed selling.
The Fed Hiked Rates, but Gold Refused to Stay Down
On September 16, the Federal Reserve raised its federal funds target range by 25 basis points to 3.75%–4.00%. It marked the Fed’s first rate increase since July 2023. Moreover, policymakers left the door open for additional tightening as inflation remains above the central bank’s 2% goal.
The Fed’s own projections reinforced that message. The median year-end federal funds projection now stands at 4.1%. In fact, 16 of 18 participants projected a year-end rate above the current midpoint.
Normally, that combination would create trouble for gold. Higher rates increase the appeal of interest-bearing assets while raising the opportunity cost of holding bullion.
Yet the market quickly changed direction.
Treasury yields backed away from their highs. The benchmark 10-year yield, which topped 5% earlier in the week, slipped back toward 4.94% on Friday. At the same time, crude oil retreated from recent highs. Those moves helped investors unwind bearish precious-metals positions established ahead of the Fed decision.
The U.S. dollar later strengthened to a seven-week high, however, which limited gold’s advance.
Silver Takes the Lead
Silver continues to show greater momentum.
Kitco’s early Friday reading placed silver near $66.35. Reuters later recorded spot silver around $66.69, up 2.3%. Gold gained about 0.7% during the same period.
Technical resistance now sits near $66.97, followed by $68.33. A stronger breakout could put $71.18 back into focus. On the downside, $65.32 provides the first important support level, followed by the $62.98 area.
Gold faces resistance around $4,400 to $4,440, according to EverBank’s Chris Gaffney. Kitco also identified support around $4,281 and $4,270.
Hormuz Keeps a Geopolitical Floor Under Bullion
The bigger story may still sit thousands of miles from Wall Street.
Iran said Friday that it struck the Togo-flagged tanker Trend as the vessel attempted to pass through the Strait of Hormuz. Meanwhile, commercial shipping through the strategic waterway remains far below normal levels. Preliminary Kpler data showed only four commodity vessels moving through Hormuz on Thursday, compared with a 10-day average of 16.
Saudi Arabia has responded by expanding alternative export routes. Saudi Aramco plans to move roughly 60 million barrels through ship-to-ship transfers near Oman during September and October. Those additional flows have helped ease immediate fears of a severe supply shortage.
Consequently, Brent crude pulled back toward $104 a barrel Friday after recently trading above $109.
That creates an unusual setup for gold.
Lower oil reduces inflation pressure and gives bond yields room to retreat. Both developments can support bullion. Yet continued disruption around Hormuz preserves gold’s traditional safe-haven appeal.
For now, precious metals sit between those two forces.
The Fed remains hawkish. However, gold has absorbed the first rate hike in more than three years and bounced. Silver has responded even more aggressively.
The next test will come from oil and Treasury yields. If the 10-year yield stays below 5% and crude continues to ease, gold and silver could keep rebuilding the ground they lost earlier this month. A renewed oil spike, however, could quickly revive inflation fears and put the Fed back at center stage.
