In light of the Central Bank’s decision to raise interest rates and the strong US data on employment, the central question remains: What will happen to gold prices? Gold is a precious metal that has both material and symbolic value in many cultures, and is considered a safe haven for investors during periods of economic and political turmoil. However, the effect of raising interest rates and improving economic conditions in the US could negatively affect gold prices.
When the interest rate rises, the cost of borrowing increases and the demand for gold as an investment tool declines. When interest is high, investors prefer to put their money in bank accounts that provide high returns rather than buying gold. This shift in investment trends leads to a decrease in the demand for gold and, consequently, a decrease in its prices.
In addition, the improvement in employment in the US may also affect gold prices. When there is strong growth in the labor market and improvement in salaries and job opportunities, investors tend to build on this economic growth and direct their investments towards other assets that yield higher returns. This includes stocks, real estate and other currencies. Thus, it increases the possibility of a decline in demand for gold and its impact on its prices.
However, we should note that gold is not only affected by internal economic factors. It is also affected by many geopolitical factors and turmoil in the international arena. When political tension, social protests or military conflicts arise, the price of gold can rise due to investors’ demand for a safe haven.
In short, the price of gold is likely to see a negative impact in light of interest rate hikes and improving economic conditions in the US. However, we must bear in mind that gold is not only affected by economic factors, but also by geopolitical factors that may lead to an increase in demand for it as a safe haven.
