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    Federal Reserve Raises Rates, Market Expects Further Hikes; Gold Prices Volatile

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    The Federal Reserve has upped its benchmark interest rate from near zero to a range of 4.5% to 4.75%, with plans for more hikes to come.[0] This follows strong economic data showing stubborn inflation and a hot job market, which has prompted policymakers to call for additional rate increases to keep inflation in check.[0] Bank of America, Goldman Sachs, Deutsche Bank, and UBS have all warned that the Fed may hike interest rates more than previously predicted.

    Retail sales in January jumped 3.0% to a record $697 billion, exceeding expectations of a 2.0% increase.[1] Consumer and producer prices also rose above estimates, furthering the need for rate increases.[2] Market expectations for the Fed to maintain its hawkish stance have been bolstered by the economic data, giving the dollar a boost.[3] However, some economists caution that if inflation continues to cool, the rate hikes may be tempered.[3]

    Finally, in the commodity spotlight is gold.[3] Gold prices have been volatile in recent weeks, with some analysts predicting higher prices on the back of the Fed's tightening monetary policy. However, the looming question is how the market will respond to further rate hikes.

    0. “Retail Investors Are Shrugging Off The Fed's Rate Hikes” Investopedia, 20 Feb. 2023, https://www.investopedia.com/retail-investors-are-shrugging-off-the-fed-s-rate-hikes-7111439

    1. “Economic forecasts are getting revised up, and people aren't thrilled about it” Yahoo News, 19 Feb. 2023, https://news.yahoo.com/economic-forecasts-are-getting-revised-up-and-people-arent-thrilled-about-it-135118589.html

    2. “Fed's failure to slow demand means no upside for stocks, analysts say” Markets Insider, 19 Feb. 2023, https://markets.businessinsider.com/news/stocks/stock-market-outlook-fed-rate-hikes-demand-cpi-retail-sales-2023-2

    3. “Sentiment Shaky Ahead Of Fed Minutes And “Higher For Longer” Rates” FXTM, 21 Feb. 2023, https://www.forextime.com/market-analysis/sentiment-shaky-ahead-fed-minutes-and-higher-longer-rates

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