US Gold Price Plummets $4,293 Amidst Fed Rate Hike
The US gold price dropped by $4,293 to approximately $143.50 per troy ounce on September 16, as spot gold fell due to the Federal Reserve's decision to raise interest rates for the first time since 2023.
According to Reuters, traders had expected a quarter percent increase in rates, which made the initial reaction rather tame. However, increased interest rates may put pressure on gold as bullion does not yield anything, and when Treasury rates go up along with the rate of return on cash, the opportunity cost of holding bullion becomes even higher.
The dollar appreciated following the rate decision, adding to the downward pressure on gold. Inflation remains a major concern for the trading of gold, with consumer prices increasing by 0.4% in August on a month-on-month basis and 3.4% on a yearly basis.