Eric Sepanek
SBC Founder
Eric Sepanek is the founder of Scottsdale Bullion & Coin, established in 2011. With extensive experience in the precious metals industry, he is dedicated to educating Americans on the wealth preservation power of gold and silver.
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Recently, the Federal Reserve implemented a rate hike for the first time in more than three years. Although higher rates are considered a headwind for gold, prices rebounded quickly following the Fed’s move. Furthermore, several major financial institutions and market analysts have maintained or issued bullish forecasts despite the return of tighter monetary policy.
Gold Price Action & Rate Hike Data
On September 16, the Fed raised rates by 25 basis points, from a 3.50%–3.75% range to 3.75%–4.00%. This decision marked a sharp reversal in U.S. monetary policy. Following six rate cuts between 2024 and 2025, the central bank unanimously voted to hike rates for the first time since July 2023. The hike came amid renewed inflationary pressures and despite strong political pressure for lower interest rates.
Immediately following the announcement, gold prices fell to roughly $4,262/oz before rebounding above $4,300/oz and approaching $4,400/oz by the end of the week. The relatively short-lived selloff showed gold absorbing a major monetary-policy headwind, even as Fed officials signaled that additional tightening could follow.
Major Institutions Still Expect Gold Prices to Rise
Within days of the Fed’s rate hike, several prominent financial institutions maintained bullish gold forecasts. That optimism was also reflected in Kitco’s first Wall Street Gold Survey following the decision, where all 16 participating analysts expected gold prices to rise the following week.
Goldman Sachs Maintains $5,400 Target
Two days after the Fed’s rate hike, Goldman Sachs reiterated its $5,400/oz end-2027 gold target, even as the bank’s economists anticipated another increase in October. While acknowledging the tightening cycle as a near-term headwind, the bank said that much of the expected tightening had already been priced into the market.
For that reason, Goldman sees the latest rate hike as more likely to slow gold’s rise than reverse it, describing the impact as a “slower near-term appreciation path rather than a lower terminal gold price.” Stronger-than-expected central bank buying remains the main force supporting its longer-term outlook, helping offset some of the pressure from higher rates.
Société Générale Sees Gold Above $5,000
Société Générale maintained its bullish gold outlook as global monetary policy shifts back toward higher rates. The group’s post-rate-hike gold price predictions remain optimistic, projecting gold around $4,750/oz in Q4 2026, $5,000 in Q2 2027, and $5,250 by Q3 2027.
The bank expects continued central bank diversification, returning ETF demand, eventually lower real rates, and potential dollar weakness to continue supporting gold even as borrowing costs remain elevated.
Saxo Bank Says Rate Hikes Are Slowing, Not Stopping Gold
Saxo Bank Head of Commodity Strategy Ole Hansen directly addressed gold’s reaction to the September increase, saying the metal appeared to have “shrugged off the US rate hike.”
Hansen argued that markets had largely anticipated the Fed’s tighter stance and that resilient investment demand continues to support prices. He maintained his bullish outlook, describing gold’s advance as being “slowed but not halted by rate hikes.”
CPM Group Issues Post-Hike Buy Signal
CPM Group issued an explicit “buy” recommendation on September 17, one day after the Fed decision, setting an initial target of $4,590 for December gold futures. Directly referencing the hike, the firm noted that gold fell “following the Fed’s decision” before quickly recovering toward $4,400.
The firm posits that the downtrend underway since late August appeared to be reversing. The firm’s analysts share the view of many top banks that gold’s downside risk is running out of room, maintaining that gold could move higher over the following several months.
History Shows Gold Can Rise During Fed Hiking Cycles
The continued bullish outlook isn’t without historical precedent. Market strategist Phillip Streible pointed to two previous Fed hiking cycles in which gold continued climbing despite higher rates.
- 2015 Hiking Cycle: Gold traded near $1,050/oz when the Fed began raising rates in December 2015. Despite eight additional hikes, gold finished 2018 roughly 20% higher.
- 2004 Hiking Cycle: Gold traded near $380/oz when the Fed began tightening in June 2004. It climbed to roughly $600/oz by the time the cycle ended in mid-2006, and eventually toward $1,900/oz in the bull market that followed.
Streible argues that much of the fear surrounding rate hikes can be priced into gold before the Fed actually acts. Following the latest increase, he maintained that the longer-term case for $5,000 gold remains intact, provided the Fed eventually slows the pace of tightening.
The Bottom Line
Gold’s quick recovery after the Fed’s first rate hike in more than three years suggests the forces behind this bull market, including central bank buying, renewed ETF demand, and long-term concerns about debt and the dollar, remain firmly in place. For investors, a near-term pullback tied to tighter policy may be less a warning sign than an opportunity to build or strengthen a position in physical gold before the next leg higher.