US Fed Hikes Rates Again, Ignites Debate Over Gold's Future

The US Federal Reserve hiked interest rates by 25 basis points to 4.0%, with its rate-setting committee voting unanimously to do so. This move is a response to sticky inflation, which has been exacerbated by rising energy prices.

Wealth managers were divided in their reactions to the Fed's decision. UBS Global Wealth Management said that the hike and prospect of further increases may keep US real yields and the dollar elevated, making it less attractive to hold non-yielding gold in the near term. However, they also noted that rising global debt levels, a weaker US dollar over time, and the likelihood of Fed rate cuts next year should support investor demand for gold.

Brad Conger, chief investment officer at Hirtle & Co, described the decision as 'Volckerian decisiveness' and said it marked a shift from the 'eternal sycophancy of the Powell era'. He noted that inflation uncertainty is impeding decision-making among businesses.