Custom taxonomy (categories) on custom post type return no results

Your code is fine, I just tested it.

Consider the following: Sometimes you may have a blog and you want URLS to beset up like .xyz/DATE/POSTNAME or perhaps you have a picture website and want it to be .xyz/category/image.

Luckily, WordPress has built-in functionality to handle this. They are known as Permalinks – you just need set yours up in the desired manner.

To do this, go to the WP admin menu -> settings -> permalinks

Then at the bottom, select ‘custom structure’ and enter /%category%/%postname%/ in the box. When you assign multiple categories to a post, only one can show up in the permalink.

To get around this, we can use the % symbols tells WordPress that this part of the URL is interchangeable.

Then hit save and try to load a post.

For more information on Permalinks, see here.