A government advisor explains how US interest rates control the movement of gold and the dollar in Iraq.
The Prime Minister’s financial advisor, Mazhar Muhammad Saleh, confirmed on Wednesday that US interest rates and the strength of the dollar are among the most prominent factors affecting the movement of gold prices globally, indicating that any change in the directions of the Federal Reserve (the US central bank) is directly reflected in the attractiveness of the yellow metal to investors and traders locally. News
Saleh told Shafaq News Agency that raising US interest rates pushes investors towards assets with returns, such as bonds and dollar deposits, at the expense of gold, which does not generate a periodic return, which often leads to a decline in demand for it and a drop in its prices globally.
He added that the rise in interest rates also contributes to supporting the strength of the US dollar, which makes buying gold more expensive for investors outside the United States because the precious metal is priced in green currency, noting that the reduction in interest rates reinforces the demand for gold as a safe haven, a store of value and a tool to hedge against inflation.
Saleh explained that the Federal Reserve kept interest rates unchanged at a range of 3.50% to 3.75%, while markets await its future directions regarding the course of monetary policy, noting that expectations of a future interest rate cut may support gold prices even before an actual decision to cut is issued.
The government advisor pointed out that Iraq, as a net importer of gold, is directly affected by global price movements, explaining that the local market is also affected by competition from the cash dollar, which represents an alternative store of value for traders and Iraqi citizens during periods of market volatility.
Shafaq.com