Fed Hikes Rates Unanimously Amid Sticky Inflation

The US Federal Reserve tightened monetary policy on Wednesday by raising its target range used to set rates by 25 basis points from 3.75 to 4.0 per cent, marking its first unanimous decision in over three years.

The rate hike was prompted by sticky inflation, some of which is underpinned by rising energy prices, and was widely anticipated by market participants.

Wealth managers at UBS Global Wealth Management noted that the rate decision and prospect of further hikes may keep US real yields and the dollar elevated, increasing the opportunity cost of holding non-yielding gold and creating near-term volatility for the yellow metal.

However, they also stated that tighter policy does not invalidate gold's longer-term investment case, citing rising global debt levels, a weaker US dollar over time, and the likelihood of Fed rate cuts next year as supporting factors.