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Understanding the Impact of Federal Reserve Interest Rate Hikes on the Gold Market

Get an inside scoop on the pulse of the market with these captivating and crucial insights on today’s trends.

  • Gold prices went down on Tuesday as the U.S. dollar saw an increase, with traders focusing on Federal Reserve Chair Jerome Powell’s speech for insights into the central bank’s rate hike plan.
  • A rise in the value of the U.S. dollar can make bullion more expensive for non-dollar holders.
  • Federal Reserve policymakers have indicated that this week’s inflation data will be a factor in deciding whether to slow down the pace of rate hikes at their next meeting.
  • Higher interest rates can decrease gold’s appeal as a hedge against inflation and increase the opportunity cost of holding the non-yielding asset.
  • A report from the European Central Bank suggests that although wage growth in the Euro zone is expected to be strong, real wages may still decline due to rapid inflation.
  • SPDR Gold Trust, the largest gold-backed ETF in the world, saw a decline in its holdings of 0.2% on Monday.
  • Other precious metals such as silver, platinum, and palladium also experienced a decrease in prices.

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