What does the US rate freeze mean for gold?

The Fed's decision to stop raising interest rates suggests that it is more concerned with avoiding recession than fighting inflation. So what does this mean for gold, silver and the dollar?

The Federal Reserve has stopped raising interest rates. Therefore, the logical question to ask ourselves is whether their decision has changed anything. I think it has.

While the Fed was raising interest rates, one could reasonably argue that its aim was to fight inflation, which continues to climb. In the 12 months ending June 30, 2005, the Consumer Price Index rose 2.5%. However, in the 12 months ending June 30, 2006, the CPI rose 4.6%. This comparison shows that even by the governments own calculation, which I believe understates the true rate of inflation, it is clear that inflation is a growing problem.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free
https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up
MoneyWeek

MoneyWeek is written by a team of experienced and award-winning journalists, plus expert columnists. As well as daily digital news and features, MoneyWeek also publishes a weekly magazine, covering investing and personal finance. From share tips, pensions, gold to practical investment tips - we provide a round-up to help you make money and keep it.