Gold prices moved higher after the U.S. Federal Reserve decided to keep its benchmark interest rate unchanged at 3.50%–3.75%, matching market expectations. Despite leaving rates on hold, the central bank maintained a generally hawkish stance, with three policymakers supporting a 25-basis-point rate increase.

Following the announcement, spot gold surged by about US$40 before easing slightly. It was last trading near US$4,073.60 per ounce, up more than 1% on the day.

The rally was largely driven by relief among investors, as markets had recently increased the probability of a rate hike to around 30% before the decision. With no increase announced, gold benefited from improved market sentiment.

The Federal Reserve did not provide specific guidance on future policy decisions under Chair Kevin Warsh, instead emphasizing that future actions will depend on economic conditions. The central bank described the U.S. economy as continuing to expand at a solid pace, supported by strong investment, productivity growth, and a stable labour market. At the same time, it acknowledged that inflation remains above its 2% target, citing supply disruptions and higher energy prices as contributing factors, and reaffirmed its commitment to restoring price stability.