Svmuu reported that the World Gold Council stated in its gold market commentary report released on June 4 that looking ahead, as inflationary pressures rise, the Federal Reserve may need to raise interest rates. We believe that when rate hikes occur, they could, counter-intuitively, be beneficial for gold.
Historical data shows that in over 50% of cases, gold has performed positively after rate hikes. The importance of the US dollar to gold's performance seems to outweigh that of interest rates. Mid-term growth and yield convergence, along with the trend of diversifying away from US assets, have already paved the way for a weakening US dollar in the future. Other factors are also supportive of gold: the structurally lower sensitivity to US interest rates of gold demand from major consuming countries like China and India, as well as global central bank purchases, may provide support for gold going forward. (Jin Shi)