Gold Gets Boost as Fed's Hawkish Hike Fails to Dent Demand
The recent FOMC decision has led to an interesting development in the gold market. Fed Chair Kevin Warsh announced a hawkish 25-bps hike to a 3.75%-4% target range, but this was neutralized by Treasury Secretary Bessent's stealth yield curve control.
This move is driving a currency debasement tailwind for gold, and analysts are assigning a Strong Buy rating to the precious metal. Central banks are now treating gold as Tier-1 liquid collateral, which means it can be used as collateral in their operations.
Additionally, capital rotation from AI-tech to gold ETFs is providing a zero-duration, zero-depreciation safe harbor for investors. Gold is no longer just a traditional hedge against inflation and currency devaluation; it's also being traded as a sovereign CDS amid stagflationary shocks and sovereign risk.