If interest rates decrease, what happens to gold prices?

Global risks fluctuate according to the course of wars and conflicts, while the volatile trend in gold prices continues. Last week, gold was influenced by U.S. inflation data, and this week it is focused on the U.S. Federal Reserve's interest rate decision.

Before the monetary policy decisions that the U.S. Federal Reserve (Fed) will make this evening, new record predictions for gold prices are coming to the forefront. Although it is thought that the world is approaching the end of the fight against inflation, signals from macroeconomic data are fueling concerns that inflationary pressures may continue. With this uncertainty, a new movement in gold prices, which are hovering around 3,000 lira, is imminent.

EXPECTATION OF A 25 BASIS POINT CUT DOMINATES

While a 25 basis point cut in the policy interest rate by the Fed today is seen as a certainty, it is expected that signals from the policy text and Fed Chairman Jerome Powell's verbal guidance will provide clues about future monetary policy.

Pricing in the money markets indicates that the Fed may cut interest rates twice next year, while concerns that the signals from the Fed may contradict the economic policies promised by Donald Trump, who was elected president in the U.S., are also causing a dampening of risk appetite.

WHAT HAPPENS TO GOLD PRICES IF INTEREST RATES FALL?

Generally, falling interest rates affect gold prices, but this effect may not always be in the same direction. A decrease in interest rates can generally direct investors towards gold, as gold is known as an investment vehicle that does not yield interest.

Gold prices are influenced by many factors such as economic uncertainties, inflation rates, and exchange rates. The interest rate cut expected from the Fed and the subsequent statements by Fed Chairman Jerome Powell may have an impact on gold prices. While a 25 basis point cut in interest rates is anticipated, it is suggested that this decision could be decisive for gold prices, potentially pushing the price of a gram of gold above 3,000 lira.

NOTE: The information provided here does not constitute investment advice in light of expert opinions and data.