The US Federal Reserve raised interest rates again last week. Apart from this, the US has indicated that there will be further interest rate hikes in the coming months. Due to this, the price of gold rose last week.
What happens to gold if interest rates rise?
Gold prices fall when interest rates rise. Because even though gold is a good asset, it does not earn any income like interest, dividend etc. Therefore, when interest rates rise, gold prices fall.
Why invest in gold?
Gold is not only a shiny rare metal but also an asset that ordinary people can invest in for many years. Gold rises in all crisis periods like war time, economic crisis. The value of gold rises above inflation. So gold is a super asset.
Gold price rise
Gold prices fell sharply after last week’s interest rate hike. However, the value of the US dollar decreased yesterday. As a result the price of gold rose suddenly.
A further hike in interest rates in the US in the coming months is expected to further depreciate the value of gold.