Fed Hike Sends Gold Prices Reeling Amid Bullish Bet on $5,000 Target

The Federal Reserve raised interest rates as expected on September 16th, but investors are waiting to see what the Fed's accompanying statement says. Citi characterizes this move as a 'fine-tuning' adjustment, implying that future hikes may not be inevitable.

Gold prices fell after the rate hike, but a large bullish bet targets $5,000 for Gold Futures (DEC6). The bet is worth $47 million and could have room to play out if further Fed tightening remains limited and long-term yields stabilize.

However, persistent inflation forcing the Fed into consecutive hikes could push Treasury yields even higher. Bloomberg Senior ETF Analyst Eric Balchunas predicts that Bitcoin ETFs will ultimately triple gold in assets, citing younger investors growing up with Bitcoin as their store of value.