Gold Prices Spike Due to Interest Rate Hike

Gold experienced a jump in value on March 16 after the Federal Reserve announced a 25 basis point increase to its benchmark interest rate. The London fix price experienced a one-day jump of 2.55 percent from $1,198.80 (PM price) to $1,229.35 (PM price). This is a positive change in direction from a decline in prices that began on March 1. The rate hike of 25 basis points from 0.75 to 1 percent was seen by some as modest, but it clearly had a more than modest impact on the price of gold.

We’ve covered gold price spikes in the past, but this one is unique because of its connection to the Federal Reserve’s interest rate hike. Increases in interest rates are rarely a positive sign for gold prices due to opportunity costs associated with holding non-yielding bullion and gold’s tie to fluctuations in the dollar. Given the unique circumstances, it is likely that other factors impacting the price of gold beyond the most recent interest rate increase are also at play.

With the market anticipating two more hikes in the interest rate this year, we’ll be watching closely to see its impact on the gold market. If you want to be alerted to price swings during the Federal Reserve’s next announcement, don’t forget that you can use our mobile app to receive alerts via email or push notifications on your phone.

 

Manhattan Gold & Silver Update

We will be opening back up on May 18th, 2020 with limited hours from 11:00am – 2:00pm. The easiest method for metal processing is to either mail, or drop off/curbside service. Customers will not be allowed in the exchange at this time. 

If you have any questions you can still contact us at 212-398-1454 and sign up for our newsletter for further announcements.

Most importantly, please stay safe! 

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