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Gold Swings Lower After Fed Signals More Rate Hikes
The Federal Reserve raised interest rates on Wednesday.
It also suggested that another increase may happen this year.
The Fed said inflation is still affecting many types of products.
Higher interest rates can make gold less attractive because gold does not pay interest.
Investors reacted by selling gold after it had risen earlier in the day.
The dollar became stronger, which also pressured gold prices.
Gold was down about 4% in September from its late-August level.
Silver, platinum, and palladium also declined.
Gold fell as much as 1.3% after Federal Reserve officials signaled another rate increase could come this year.
The Federal Open Market Committee unanimously raised the federal funds target range to 3.75%-4%.
Gold reversed an earlier gain of as much as 1.7% and was down 0.6% at $4,266.73 an ounce.
The dollar rose as much as 0.5%, while the two-year Treasury yield reached its highest level since July 2024.
The Fed said persistent inflation required tight policy aimed at returning inflation to its 2% target.
- Who
- The Federal Reserve, its Federal Open Market Committee, and Fed Chair Kevin Warsh were involved in the decision and guidance.
- What
- The Federal Open Market Committee unanimously raised the federal funds rate target range to 3.75%-4% and signaled that another increase may occur.
- Where
- The decision concerned the United States economy, while the market reaction occurred in New York trading.
- When
- The decision was announced Wednesday; gold was measured at 3:43 p.m. New York time afterward.
- Why
- The Fed said it was keeping policy tight to contain inflation and return it to its 2% target.
Key facts
- Rate decision
- The federal funds target range was raised to 3.75%-4%.
- Vote
- The Federal Open Market Committee voted unanimously.
- Gold reaction
- Gold fell as much as 1.3% after reversing an earlier gain of 1.7%.
- Gold price
- Gold was down 0.6% at $4,266.73 an ounce at 3:43 p.m. New York time.
- Dollar reaction
- The dollar rose as much as 0.5%.
- September performance
- Gold was down about 4% in September from above $4,700 in late August.
- Inflation target
- The Fed is seeking to return inflation to 2%.
Quotes
Kevin Warsh
Chair of the Federal Reserve
“This summer’s inflation readings do not tell me that underlying trends have meaningfully improved.”
livemint.com
Elias Haddad
Global head of markets strategy at Brown Brothers Harriman
“hawkish hike hits gold through a stronger dollar and higher real yields”
livemint.com
Sources
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