Dear ZTraders,
Gold prices often have an inverse relationship with interest rates. When interest rates are low, the opportunity cost of holding gold decreases because gold doesn’t generate any interest or dividends. As a result, investors might prefer to allocate more of their portfolio into gold, which is considered a store of value and a hedge against inflation.
Conversely, when interest rates rise, the opportunity cost of holding gold increases. This is because other assets like bonds or savings accounts start yielding higher returns due to the elevated interest rates. Investors might then move their funds away from non-interest-bearing assets like gold, which can lead to a decrease in demand and, consequently, a potential drop in gold prices.
In summary, a pivot toward lower interest rates often prompts investors to flock to gold as an alternative investment, thus driving up its prices. Conversely, higher interest rates can diminish the appeal of gold, potentially causing its prices to decrease.
Greetings,
ZTRADES
Gold prices often have an inverse relationship with interest rates. When interest rates are low, the opportunity cost of holding gold decreases because gold doesn’t generate any interest or dividends. As a result, investors might prefer to allocate more of their portfolio into gold, which is considered a store of value and a hedge against inflation.
Conversely, when interest rates rise, the opportunity cost of holding gold increases. This is because other assets like bonds or savings accounts start yielding higher returns due to the elevated interest rates. Investors might then move their funds away from non-interest-bearing assets like gold, which can lead to a decrease in demand and, consequently, a potential drop in gold prices.
In summary, a pivot toward lower interest rates often prompts investors to flock to gold as an alternative investment, thus driving up its prices. Conversely, higher interest rates can diminish the appeal of gold, potentially causing its prices to decrease.
Greetings,
ZTRADES
Related Ideas
GOLD UP
ZILATRADES
Premium
about XAUUSD