The relationship between the Federal Reserve’s interest rate hikes and silver prices

An interest rate hike is an action by the central bank of a country or region to increase interest rates, thereby increasing the borrowing costs of commercial banks and other financial institutions to the central bank. The purpose of raising interest rates includes reducing money supply, suppressing consumption, curbing inflation, encouraging private deposits, slowing down or inhibiting market speculation, etc. Raising interest rates can also be used to increase the currency of the country or region. An indirect means to the value of other currencies.

Generally speaking, when a country's economy is overheating and inflation becomes increasingly severe, it can cool the economy by raising interest rates. The Federal Reserve's interest rate hikes promote the appreciation of the U.S. dollar. , will exert certain pressure on stock market commodities. However, the specific economic environment needs to be comprehensively analyzed in conjunction with the current economic cycle and other factors.

Generally speaking, silver exists in the market as a zero-interest commodity. It is directly linked to the U.S. dollar. An increase in U.S. dollar interest rates will inevitably lead to the U.S. dollar being supported by buyers in the international market. More people will buy U.S. dollars because they can get interest. Then the 17 consecutive increases in U.S. dollar interest rates mean that Silver should be sold off as U.S. interest rates rise. But the fact is that silver has been trending extremely strongly recently, and the U.S. dollar’s ??interest rate hike cycle has not affected the trend of silver at all.

In short, the Fed’s response to silver prices The impact is not a simple direct or inverse relationship, and requires a comprehensive analysis based on the macroeconomic background, economic cycle and other short-term factors at the time. In the long term, we need to be wary of the possible pressure on the commodity market and silver caused by the Fed's interest rate hikes.< /p>

In addition, the impact of rising interest rates is on the investment field. Investors who invest in the stock market or futures market are worried about the impact of rising interest rates on the market. In order to avoid the upcoming risks, they will choose to buy silver, etc. Precious metals store value.