Rate Hikes Don't Always Spell Doom for Gold
The reflex to sell gold and silver when interest rates rise is often wrong. This behavior is driven by a simplistic assumption that higher rates directly translate into lower precious metal prices.
A closer look at the current economic environment shows that it's not that straightforward. The Federal Reserve has raised its target rate range to 3.75-4.00% after its September 2026 FOMC meeting, while headline CPI is still running at 3.4% year-over-year.
The August industrial production report showed manufacturing output falling 0.3%, with business equipment down around 0.5%. This indicates a stagflation-adjacent setup, where inflation is stuck above target and growth is decelerating or flat.
A central bank chasing inflation is not the same as one raising rates into a boom. The World Gold Council's research on stagflation finds that periods combining rising inflation expectations with falling growth expectations have produced strong gold returns since 1973, precisely when risk assets tend to struggle.