Following The Fed’s Interest Rate Decision, Gold Stock Prices Initially Settled Slightly Higher Before Increasing

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Following the Federal Reserve’s decision to raise interest rates by 75 basis points, gold stock prices increased in electronic trading, ending the day on Wednesday marginally higher.

The benchmark interest rate set by the central bank increased significantly for the fourth time in a row. Additionally, the Fed plans to keep raising rates “until they are sufficiently restrictive to return inflation to 2% over time.”

Gold futures had a little price increase at the session’s finish, and they continued to rise throughout the electronic trading session. Prices were at $1,664 just before Fed Chairman Jerome Powell launched a press conference following the decision by the central bank to raise its rate by 0.75 percentage points to a range of 3.75% to 4%.

Although the Fed increased interest rates by 75 basis points as anticipated, Rob Haworth, senior investment strategist at U.S. Bank Wealth Management, told MarketWatch that “the change in phrasing seemed to suggest to markets that the pace of rates hikes will slow or stop.”

The phrase “the lags with which monetary policy influences economic activity” in particular, which was the statement’s crucial phrase, indicated that the Fed “presumably realizes the quick pace of interest rate rises is still working through the economy,” according to Haworth.

In 2022, he claimed, “the strong U.S. currency of this year and rising real interest rates have kept gold prices under pressure.” “This tendency is unlikely to change even if Fed rate hikes slow. In order for gold prices to begin to gain support, rate hikes will probably need to be suspended.

Powell stated during the press conference that he doesn’t think the Fed has “overtightened” and that it still has “some ground to cover” before raising interest rates.

Powell spoke late on Wednesday afternoon as the 10-year Treasury note yield TMUBMUSD10Y, 4.092% and the ICE U.S. Dollar index DXY, 0.46% both declined by 0.1%.

In October, gold stock prices recorded their seventh consecutive monthly loss, adding to a challenging year that has seen the price of the yellow metal decline as the value of the dollar and Treasury yields have increased, dulling some of its sparkle.

Featured Image:  Depositphotos © Iurii

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About the author: Valerie Ablang is a freelance writer with a background in scientific research and an interest in stock market analysis. She previously worked as an article writer for various industrial niches. Aside from being a writer, she is also a professional chemist, wife, and mother to her son. She loves to spend her free time watching movies and learning creative design.