Gold Takes Hit as Fed Raises Rates and Bonds Squeeze Out Precious Metal

The recent decision by the Federal Reserve to raise interest rates has put gold under pressure, causing it to decline nearly 2.3% over three consecutive sessions.

Despite expectations of a rate increase, the Fed's statement emphasized that inflation remains too high and persistent, with Chair Kevin Warsh noting that economic data has failed to show a clear slowdown in inflation.

This hawkish stance from the Fed is limiting gold's recovery potential as investors increasingly price in further rate hikes, particularly towards the 4.25% level by October.

The bond market is also playing a role, with elevated yields making fixed-income instruments more attractive than gold, which does not generate yield.