WGC: Gold Unaffected by Central Bank Rate Hikes

SEATTLE (Scrap Monster): The World Gold Council (WGC) noted that gold remained resilient to recent hike in funding rate by world central banks, as part of their efforts to contain rising inflation.

According to Krishan Gopaul, Senir Analyst, EMEA World Gold Council, the US Fed Reserve announced its largest single rate hike in almost three decades, hiking the funding rate by 75 basis points.

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Several other central banks across the world too bolstered their hawkish credentials. For instance, the Bank of England increased its base rate by a further 0.25%. Also, the Swiss National Bank hiked rates for the first time in 15 years. On the contrary, the Bank of Japan maintained its accommodative stance despite increased pressure on the yen.

The WGC noted that gold prices remained steady year-to-date, up marginally by 1% in U.S. dollars. The prices held higher in other currencies. The yellow metal continues to be well-supported by inflation and geopolitical risks, despite headwinds on account of higher interest rates.

WGC believes that the combined impact of inflation pressure and widespread geopolitical risks will reinforce gold as an attractive hedge for both retail and institutional investors in the prevailing turbulent environment.