Gold Holds Above $4,400 as Central Banks Absorb Supply

Gold took the Federal Reserve's first rate hike in three years in stride and closed the week at $4,413.20 (GC=F), up 0.9% from Monday's open of $4,375. The path was bumpier than the finish line suggests: the metal slid to $4,273.30, its lowest level in over a month, ahead of the September 16 decision on oil-driven inflation, then recovered as buyers stepped in below $4,300.

The setup was hostile on paper. The Federal Reserve raised its benchmark rate by 25bp to a 3.75%-4.00% range on September 16 and signaled one more increase this year on oil-driven inflation, a classic headwind for an asset that pays no yield. Crude amplified the pressure: WTI jumped toward $105.83 after the Saudi pipeline outage before giving back most of the spike, and gold sold off into the announcement.

What stopped the slide is what has carried gold all year: sovereign demand. Central banks bought a record 288.9 tonnes in Q2, and Goldman Sachs nowcasts buying accelerated to about 100 tonnes a month in June. That bid absorbs supply the moment dips open, and it showed. Support at $4,273.30 held on the first test, and the bounce carried prices back toward resistance near $4,423.30, this week's high. For a deeper look at how that dynamic is playing out across precious metals, see Gold and Silver After the Fed's First Hike in Three Years: Why Sovereign Demand Keeps the Metals Thesis Alive.

The bull case rests on that structural bid persisting. A second hike and firmer real yields would test it again, so one good week does not mean the metal is out of the woods. But with central banks serving as the marginal buyer, the floor sits below, and that has been the through-line across the metals complex all week. The rate decision that set this week's swing is unpacked in The September 16 Fed Hike, One Week On: What the Oil and Supply Floor Means for Rates, Gold and Equities Into Year-End, while Oil Cedes the Hormuz Spike as Copper Builds Managed-Money Length tracks the crude leg and its copper read-through.

Outlook: watch the Fed's next move and the Saudi pipeline repairs; a weekly close above $4,423.30 would signal the pullback is over, while holding $4,273.30 keeps the structural bid thesis intact. Bookmark our gold price coverage for the daily read on the broader precious metals complex.

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