Another Australian Rate Rise and US Looking To Raise Again as Well

3 May 2023

As at 10 am, AEST

Gold Spot Price $AU3025

Silver Spot Price $AU38.16

Platinum Spot Price $AU1611

Yesterday, the Reserve Bank of Australia (RBA) surprised many by announcing an increase in the base interest rate by 0.25% to 3.85%, despite predictions to the contrary. This follows a series of previous increases, resulting in heightened financial strain on Australian households due to rising mortgage rates and the cost of goods and services.

In a similar vein, the Federal Reserve (FED) in the United States is expected to announce an increase in its baseline rates to 5.25% tomorrow. Although some economists are hopeful that the cumulative impact of more than 500 basis points of rate hikes in the past 12 months may be sufficient to curb inflation, the anticipation of tomorrow's announcement has already caused a 1.2% decline in the US500.

Adding to the economic pressures faced by the US, discussions surrounding the national debt ceiling are ongoing, and the earning season has been subdued. These factors, in combination with the forthcoming interest rate increase, are creating an environment of significant strain on the US economy.

As expected, the above announcements led to a jump in both gold and silver prices in the last 24 hours. The exodus from the share market into precious metals continues.

*Not financial advice, please do your own research prior to any investment decisions you make.

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