Gold prices, US stocks plunge because of the Fed

 Gold prices, US stocks plunge because of the Fed

The possibility that the Fed will raise interest rates in March causes the DJIA, S&P 500 indexes to go down, and the price of gold to drop by nearly $30 an ounce.

Closing the session on January 26, the world spot gold price lost 28.5 USD to 1,819 USD an ounce. Prices fell as the US dollar and US government bond yields rose after US Federal Reserve Chairman Jerome Powell said it was "possible" to raise interest rates at a mid-March meeting.

The world gold price dropped yesterday.

The world gold price dropped yesterday.

During the session, the precious metal fell to $1,815 at one point – the lowest in a week. High interest rates increase the opportunity cost of holding a non-yielding instrument, like gold.

"Powell's tightening statements about the possibility of a March rate hike, the strength of the economy and remarks about the size of the balance sheet have sparked a wave of bond selling and dragged down The US dollar is higher, thereby putting pressure on gold", said Tai Wong - New York-based precious metals analyst. exceed $1,850 in the short term".

In the US stock market, the main indexes also fluctuated yesterday because of the announcement of the possibility of raising interest rates by the Fed. DJIA closed down 0.4% to 34,168 points. During the session, this index sometimes lost more than 500 points.

The S&P 500 fell 0.2 percent to 4,349 points. The Nasdaq Composite was almost flat again, helped by gains in Microsoft shares.

This is the 3rd session in a row these indexes fluctuated strongly. Nasdaq is now in correction territory, down more than 13% this month. The S&P 500 has lost more than 8% for the month and nearly 10% from its most recent peak.