Understand the relationship between the Federal Reserve's interest rate cuts and gold at a glance!📈
1️⃣ Central bank cuts interest rates (monetary easing)
Lowering the benchmark interest rate significantly reduces borrowing costs and increases market liquidity.
2️⃣ Real interest rates decline & opportunity costs decrease
Real interest rate = Nominal interest rate - Inflation
The return on holding cash or bonds decreases.
3️⃣ Funds seek safety/hedging
Investors turn to gold to combat inflation and hedge against market uncertainty.
4️⃣ Gold demand increases, gold prices rise
Market demand surges, gold prices continue to climb, and gold becomes the preferred store of value.
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