Gold Prices Resist Fed Rate Hike Amid Fiscal Dominance
The US Federal Reserve's decision to raise interest rates has had an unexpected effect on gold prices. After Fed Chair Kevin Warsh announced a 25-bps hike, spot gold (XAUUSD:CUR) remained relatively stable, trading at $4,315/oz. However, this move is part of a larger trend where the traditional inverse correlation between gold and real yields no longer applies.
According to the analyst, the market has entered a regime of fiscal dominance, driven by Treasury Secretary Bessent's stealth yield curve control. This means that gold is now being treated as Tier-1 liquid collateral by central banks.
The shift in investor sentiment is also evident in capital rotation from AI-tech to gold ETFs, offering a zero-duration, zero-depreciation safe harbor for investors.