Gold futures closed on Friday (Sept. 23) plunging 1.8% to their lowest level in more than two years, driven by the Federal Reserve’s hike in interest rates to curb inflation.
Gold futures closed on Friday (Sept. 23) plunging 1.8% to their lowest level in more than two years, driven by the Federal Reserve’s hike in interest rates to curb inflation.
Comex Gold Contract Delivered in December Under 1.8% to $ 1,651 / ounce.
Furthermore, gold prices were also driven by the appreciation of the dollar. and rebound in US government bond yields The Fed’s two-year US Treasury yield, which is sensitive to the Fed’s monetary policy, rose above 4.2% today and outpaced 10-year and 30-year US Treasury yields .
Short-term bond yields bounce higher than long-term yields As a result, the US bond market has an inverted yield curve, signaling a recession.
–
The Fed voted to raise the short-term interest rate from 0.75% to 3.00-3.25% this session. He also signaled that the Fed will continue to raise interest rates to reach 4.6% in 2023.
Although gold is seen as a hedge against inflation. It is a safe haven when markets are faced with political and economic uncertainty. But the Fed tends to accelerate interest rates. overshadowed these positives. This is because a rebound in interest rates increases the opportunity cost of holding gold. Because gold is an asset that does not return in the form of interest.
–
Investors expect the Fed to raise interest rates by 0.75% during the November monetary policy meeting. and rose 0.50% in December
If the Fed raises interest rates as expected. This will result in the Fed raising interest rates by 0.75% four times in a row in June, July, September and November meetings. Meanwhile, the Fed’s official rate will reach 4.25-4.50% by the end of the year. And it will keep the interest rate above 2.50%, the level the Fed considers neutral. without being too relaxed or too strict
A CNBC poll showed Wall Street analysts predicted that The Fed will continue to raise interest rates until they hit the highest level. and will keep the interest rate at this level for some time. The Fed will use a “hike and hold” interest rate measure instead of the previously planned “hike and cut” measure.
The survey results indicated that Analysts expect the Fed to continue raising interest rates until reaching 4.26% in March. The Fed is expected to hold interest rates at that level for nearly 11 months, the average of analysts who expect the Fed to hold interest rates for three to two years.
Additionally, analysts say there is a 52% chance that the US economy will face a recession in the next 12 months. Due to the Fed’s too restrictive use of monetary policy.
At the same time, analysts say the Fed will take many more years. Before it managed to control inflation at its 2% target, the consumer price index (CPI) was forecast on an annual basis. It will remain at 6.8% at the end of 2022 and 3.6% at the end of 2023, before falling to the 2% target set by the Fed in 2024.
—
![[국제]The condolences of the Queen of the United Kingdom make the economy grow … Hotel prices double](https://image.ytn.co.kr/general/jpg/2022/0924/202209240701554044_t.jpg "[국제]The condolences of the Queen of the United Kingdom make the economy grow … Hotel prices double")