Gold Tends to Rise After Four Out of Five Fed Hikes

The relationship between the US Federal Reserve's interest rate hikes and gold prices is an important one to understand. According to recent data, gold tends to rise after four out of five Fed interest rate hikes and falls after one. This pattern was observed in various instances, including a 50-basis-point cut in September 2024, a dovish meeting in March 2024, and a hold on rates in early 2025.

The only instance where gold fell after an interest rate hike was in June, when the Fed had been signaling hikes since April and held with a hawkish 9-3 vote in July. In that month, gold lost about 13 percent, while the dollar gained around 3 percent.

However, the Bank of Japan's (BoJ) stance on interest rates has never influenced gold prices. Instead, it is the Fed's stance at the time that determines gold's direction.

Looking at recent events, the latest interest rate hike by the Fed with 16 out of 18 members expecting more, bears some resemblance to the June hike. This could potentially lead to a similar outcome for gold prices.