Fed's First Hike Since 2023: Gold Holds, Yields Peak

The Federal Reserve raised its target range by 25 basis points to 3.75 percent to 4.00 percent on September 16, its first hike since 2023. The vote was unanimous at 12 to 0 under Chair Kevin Warsh, and the Summary of Economic Projections points to at least one more increase before year end. The move landed against August core CPI that rose 0.3 percent month over month, above the 0.2 percent consensus, pushing the headline rate toward 3.4 percent year over year.

Markets moved less on the hike itself, which was broadly priced, and more on the projections confirming that tightening is not finished. Equities closed roughly flat, with SPY easing 0.22 percent to $762.60 while QQQ gained 0.29 percent as growth held up against a higher discount rate. The clean winner was at the long end of the curve, where Treasury yields retreated after the 10-year touched around 5.0 percent, its highest in 19 years, before easing to 4.95 percent. That pattern, yields off the high alongside a muted equity tape, tells you this was as much an oil and supply story as a pure Fed story.

The inflation input includes crude. A Saudi east west pipeline outage threatened about 4 percent of global crude supply, and Houthi pressure near the Bab el Mandeb strait kept the Red Sea risk premium bid. When oil cooled, yields eased and gold and silver returned to their inflation-hedge footing after three days of risk-off pressure. Spot gold recovered toward $4,340 to $4,368 after holding the $4,400 area, and silver reclaimed $65 on a 1.46 percent weekly gain as the gold/silver ratio compressed toward 66.8. Initial jobless claims fell to 196,000, the lowest since July, reinforcing a stable labor market even as the Fed tightens.

The near-term path is range bound with a hawkish repricing floor beneath it. Watch the next CPI on October 14 and the next FOMC decision in late October or November, with weekly jobless claims due September 24 the first scheduled print in the window.

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