Fed Rate Hike Triggers Drop in Gold Prices
Following a recent meeting conducted by the U.S. Federal Open Market Committee, gold prices came under renewed selling pressure after interest rates rose by 25 basis points. The decision lifted the Federal Funds Target Range to 3.75%–4% and provided fresh support to the dollar, which weighed on the precious metal. The rate increase was widely observed by financial markets because higher U.S. interest rates can reduce the appeal of gold relative to interest-bearing assets. Unlike government bonds, money-market instruments and other fixed-income investments, gold does not generate regular interest or dividend payments. As a result, the opportunity cost of holding…