{"id":41381,"date":"2023-07-27T22:34:34","date_gmt":"2023-07-28T02:34:34","guid":{"rendered":"https:\/\/ifintechworld.com\/investing\/why-gold-prices-climbed-after-the-feds-decision-to-raise-interest-rates\/"},"modified":"2023-07-27T22:34:36","modified_gmt":"2023-07-28T02:34:36","slug":"why-gold-prices-climbed-after-the-feds-decision-to-raise-interest-rates","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=41381","title":{"rendered":"Why gold prices climbed after the Fed\u2019s decision to raise interest rates"},"content":{"rendered":"
\n

Gold futures climbed to a fresh intraday high Wednesday afternoon, their highest in nearly a week, after the Federal Reserve announced a decision to raise its benchmark interest rate, as expected, but also left the door open for further rate hikes.<\/p>\n

The U.S. central bank on Wednesday raised its benchmark interest rate by a quarter-percentage point to a range of 5.25% to 5.5%, a 22-year high. <\/p>\n

\n

The official Fed statement released after the meeting \u201cgave no hint of when the Fed might pause its rate hikes once more, as it did at the June meeting, and no guidance on when it might actually pivot and begin cutting rates,\u201d said George Milling-Stanley, chief gold strategist at State Street Global Advisors.<\/p>\n

Without that additional guidance on the likely course of future Fed activity, and the price of gold \u201cfirmed more than $10 an ounce in the immediate aftermath of the announcement,\u201d said Milling-Stanley.<\/p>\n

August gold
\n GCQ23,
\n +0.12%<\/bg-quote><\/p>\n

GC00,
\n +0.12%<\/bg-quote>
\n was at $1,976.30 an ounce in electronic trading. It climbed to as high as $1,979.90 after the Fed announcement, the highest intraday level for a most-active contract since July 20, according to Dow Jones Market Data.<\/p>\n

Prices had already gained $6.40, or 0.3%, to settle at $1,970.10 on Comex Wednesday, ahead of the central bank\u2019s decision.<\/p>\n

Higher interest rates may provide a boost to the U.S. dollar, making gold more expensive to foreign buyers, while increasing the yield that investors can get from holding Treasury bonds \u2014 but that wasn\u2019t the case Wednesday afternoon.<\/p>\n

Roughly two hours after the Fed announcement, the ICE U.S. Dollar index
\n DXY,
\n -0.02%<\/bg-quote>,<\/span>
\n a gauge of the dollar\u2019s strength against major currencies, was down nearly 0.4% to 100.99, providing support for dollar-denominated prices of gold. The yield on the 10-year Treasury
\n TMUBMUSD10Y,
\n 3.986%<\/bg-quote>
\n was at 3.8579%, down from 3.911% on Tuesday.<\/p>\n

Will Rhind, founder and CEO of GraniteShares, which runs the GraniteShares Bloomberg Commodity Broad Strategy No K-1 exchange-traded fund
\n COMB,
\n -0.73%<\/bg-quote>,<\/span>
\n said not much changed from the Fed\u2019s last rate hike in May, but that rate hike \u201cdid feel a little unnecessary.\u201d The central bank left the benchmark interest rate unchanged in June. <\/p>\n

Given that, \u201cwe believe we could very well have seen the last rate hike of this cycle,\u201d Rhind said. With inflation falling to 3% and rates now at their highest level in 22 years, \u201cthe sense of urgency from the Fed is much less than it was during past meetings,\u201d he said.<\/p>\n

The labor market is also weaker than this time last year, which was noted by the Fed, he said. The government will release its July employment report on Aug. 4.<\/p>\n

The central bank will continue to be data driven, but markets are \u201ccautiously optimistic about the prospects of tamed inflation and pathway to lower rates,\u201d Rhind said.<\/p>\n

In his press conference, Fed Chairman Jerome Powell said the central bank would assess additional information on inflation, employment and economic growth before determining its next step and repeatedly stressed that the Fed would keep its options open. <\/p>\n

Depending on data, it was \u201ccertainly possible\u201d the Fed would deliver another rate hike in September or that it would hold steady, Powell said. <\/p>\n

Overall, the Fed left investors wondering if it has \u201cyet another hike in their quiver,\u201d said Brien Lundin, editor of Gold Newsletter. \u201cRegardless of what that answer may be, the markets, and particularly gold, seem to have accepted that this rate hike cycle has essentially peaked.\u201d<\/p>\n

<\/p>\n
\n

\n \u201c<\/span> \u201cGiven that the downside of the cycle is inevitable and only the timing is in question, gold seems to represent an exceptional value at current levels.\u201d \u201d<\/span>\n <\/p>\n


\n \u2014 Brien Lundin, Gold Newsletter<\/span>
\n <\/small><\/p><\/div>\n<\/p><\/div>\n

Gold appears to have \u201cbottomed earlier this month\u201d and is in the process of factoring in the next eventual move lower in rates, he said.<\/p>\n

\u201cGiven that the downside of the cycle is inevitable and only the timing is in question, gold seems to represent an exceptional value at current levels,\u201d said Lundin.<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Gold futures climbed to a fresh intraday high Wednesday afternoon, their highest in nearly a week, after the Federal Reserve announced a decision to raise its benchmark interest rate, as expected, but also left the door open for further rate hikes. The U.S. central bank on Wednesday raised its benchmark interest rate by a quarter-percentage […]<\/p>\n","protected":false},"author":1,"featured_media":19709,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"video","meta":{"footnotes":""},"categories":[239],"tags":[83],"class_list":["post-41381","post","type-post","status-publish","format-video","has-post-thumbnail","hentry","category-investing","tag-featured","post_format-post-format-video"],"yoast_head":"\nWhy gold prices climbed after the Fed\u2019s decision to raise interest rates | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Gold futures climbed to a fresh intraday high Wednesday afternoon, their highest in nearly a week, after the Federal Reserve announced a decision to raise\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/ifintechworld.com\/?p=41381\" \/>\n<meta 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