Gold Prices Reach a 3-Month Low Due to the Expected Rate Hikes

The US Federal Reserve stated that the US economy was quite strong and the inflation did not fall as expected. As such, they would be hiking the interest rates in the coming year. This caused gold prices to tumble and reach a 3-month low.

Gold prices recently fell
  • Gold prices recently fell to their 3-month low as the US Federal Reserve hinted at a rate hike
  • The possible rate hike might happen in July 2023 but gold prices have started declining
  • Experts believe that gold prices might fall further unless a slow economic forecast turns the tables
  • You can invest in gold amid the falling prices if the metal aligns with your investment strategy

The US Federal Reserve makes monetary policies for the country to ensure the economy runs smoothly and inflation stays in check. Recently, the Reserve conducted its economic research and hinted that the US economy was in a strong position. Since inflation was not reducing as planned, the interest rates would be increased in the coming year.

The expectation of another interest rate hike affected gold prices which fell. The price of spot gold was reduced by 0.7% to amount to $1929.99 per ounce. This was the lowest drop since March 17th. The US gold futures were also affected. Their price also fell by 1.4% to amount to $1941.50.

Spot silver, on the other hand, fell by 2.8% and stood at $23.2636 per ounce. Platinum also suffered a 1.2% fall to amount to $963.72 while palladium suffered a 1.4% loss to stand at $1366.44.

Furthermore, with the proposed rate hike, the US Dollar index increased and made bullion dearer for investors who have invested in other currencies.

Also Read – New Sovereign Gold Bonds announced by the government. Know more.

What have experts said?

Experts and gold traders believe that depending on the Fed’s outlook on rate hikes, gold prices would continue to be affected. If the hikes continue, the prices might fall further.

Experts believe that the rate hike is almost certain with a possibility that it would happen in July 2023. The market is awaiting the country’s economic data which would be released in the coming months.

Moreover, experts stated that since this is a period of low demand for physical gold, the prices might fall lower. However, if the US economic data shows a considerable downturn, gold prices might increase on the back of increased demand.

Experts are also awaiting the results of the Central Bank meeting of European countries wherein borrowing costs might rise to the highest level ever.

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The bottom line

While international gold prices are falling, its effect might also reflect in the Indian markets. So, if you are looking to invest in gold, the falling prices might be a good time to do so. However, understand the return aspect of gold as an investment and then make an informed choice.

Also, read – Know the gold storage limits and taxation before you buy the metal





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