Fed Rate Hike Weighs on Gold and Silver Prices
The Federal Reserve's decision to raise its key policy rate by 0.25% has weighed on gold and silver prices, as investors anticipate further tightening of global central bank policies.
Richmond Fed President Tom Barkin stated that recent data show the U.S. economy continues to strengthen, with inflation risks tilted to the upside. He believes the central bank will need to maintain its restrictive policy for an extended period, given the current pace of inflation.
The market expects a 90% chance of another rate hike by the Fed this year, while core inflation is not expected to reach the 2% goal until 2029.
Counterbalancing trends include Middle East tensions, which are bullish for both gold and silver due to higher energy prices. However, Saudi Arabia's recent increase in oil exports has a deflationary effect.