What does the race to raise rates mean for precious metal prices?

(Phil Carr – The Gold & Silver Club)

It’s official: Central banks across the world are massively behind the curve on battling inflation and no matter what actions they take now, it will be nowhere enough to tame ever-rising inflationary pressures.

“Rate Hike Surprises” as they are now known – have become one of the most predictable money making opportunities that continue to present savvy traders with an endless flow of back-to-back profitable trading opportunities almost on a weekly basis.

The great news is that trend is here to stay and set to continue throughout the third quarter of 2022 as interest rate hikes take front and centre stage.

Last month, the Federal Reserve dropped a bombshell on the markets by raising interest rates by 75 basis points – the biggest increase since 1994 with Fed Chairman Jerome Powell signalling yet more jumbo-sized rate hikes ahead.

One day after the Federal Reserve’s biggest interest-rate hike in 30 years – many other central banks jumped on the “More Bigger and Faster” Rate Hike bandwagon – scrambling desperately not be left behind and boosting the odds of a recession significantly in the process.

The Swiss National Bank made a surprise 50 basis points rate hike for the first in 15 years. While the Bank of England moved rates to the highest level in 13 years as it anticipates inflation to hit 11% this year.

Elsewhere, The Reserve Bank of Australia and The Reserve Bank of New Zealand equally surprised the market with a 50 basis point hike.

In total, more than 60 central banks faced with unprecedented inflation have now joined the global race to hike rates aggressively at any at any cost necessary. This marks the biggest number of large rate moves at any time since the turn of the millennium and eclipsing the most recent global monetary tightening cycle, which was in the run-up to the Global Financial Crisis.

Fast forward to July and that narrative is once again in full force and showing no signs of slowing down anytime soon!

Earlier this month, Canadian policymakers became the latest to surprise markets with a bigger than expected rate increase, opting for a 100 basis point hike – the largest by any G7 economy since 1998.

This week, The European Central Bank also joined the club with – you guessed it – a “very predictable” larger-than-expected interest rate hike, as it moved to contain record high inflation brought on by rising energy costs and the war in Ukraine.

Are you starting to see the trend here now?

Looking ahead, interest rate hikes will remain the primary focus for with The Bank of England and U.S Federal Reserve back on the agenda again next week and more surprise hikes almost inevitably likely.

It goes without saying that this is a traders’ market packed with endless opportunities to capitalize on the short-term macro-driven volatility – And that’s the optimal strategy right now!

Where are prices heading next? Watch The Commodity Report now, for my latest price forecasts and predictions: