Chat with us, powered by LiveChat Understanding the Relationship Between Interest Rates and Investing in Precious Metals

WE WILL BEAT ANY COMPETITOR'S ADVERTISED PRICE - Call Now To Confirm Product Availability 1-800-559-0088


Understanding the Relationship Between Interest Rates and Investing in Precious Metals

A Closer Look At What Makes American Eagle Gold Coins So Popular

Precious metals like gold and silver are commonly used for investment purposes across the world. By the end of 2020, the second most common use of gold was as investment, followed by jewelry which remained the top use. Approximately 495 metric tons of gold were used for investment purposes.

However, there are quite a few factors you need to take into account, like the interest rate and rate of inflation, before deciding to invest in precious metals. These factors can affect the value of precious metals and can make them a poor investment if not planned properly.

Keep reading this blog to learn more about how interest rates and investment in precious materials are connected.

A Rise In Interest Rates

Interest rates rise when the economy is doing well, businesses expand, and people have a higher disposable income. With a higher income and an environment conducive to business expansion causes people to borrow more.

This situation causes a rise in the interest rates, and financial institutions expect a higher return from the loans they give.

An increase in interest rates also bolsters the domestic currency and the need for safe haven investments like gold coins and bullions decreases. In such a scenario, it’s common for the short-time prices of precious metals like gold to go down.

Falling Interest Rates

When the economic confidence weakens and there’s little to no growth, the interest rates fall or stay at the base rate. The fall in economic growth affects businesses, cost of living, wages and often increases unemployment. There are also high chances that the domestic currency will also be devalued.

Because people can’t afford to borrow money, central banks lower interest rates to encourage them.

In times when economic confidence pales, investors find investing in precious metals is safer. And based on trading in gold futures, the prices of gold prices go up.

The Fed Rate Hike

Although it’s commonly believed that there’s a negative correlation between interest rates and prices of precious metals, a detailed examination of historical data suggests that there might be temporary positive relationships at times.

Rates in the US have a greater influence on metals like gold compared to other economies. Because gold is most commonly traded using US dollars, its interest rates have a stronger impact on the price of gold.

The precious material commodity market’s behavior changes when the Federal Reserve increases interest rates.

Reach Out To Orion Metal Exchange To Buy Gold Bullion Bars And Coins Online

If you want to invest in gold and silver and don’t know much about it, get in touch with us.

Our experienced precious metal consultants can guide you on how to invest in gold coins, gold bullions, and gold bars. Contact our precious metals investment dealers today!

Your Order Summary

A minimum total purchase amount of $10,000.00 is required to checkout. Click here to shop more

Your Details Back
Your personal data will be used to process your order, support your experience throughout this website, and for other purposes described in our privacy policy.

Once you've placed the order, our team will contact you shortly.

By submitting your information, you agree to be contacted by Orion Metal Exchange via phone, email or text. You can unsubscribe at any time. Please see our Privacy Policy.