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Gold prices ran volatile through 2026 before a recent rally drew renewed investor interest back to the metal.
The sequential chain: softer inflation data lowers Federal Reserve rate-hike probability, a less aggressive rate path removes the real-yield headwind on a non-yielding asset, and capital rotates accordingly.
The Fed rate mechanism The relationship between Fed policy and gold is direct.
Rate hikes lift the real yield available on interest-bearing instruments, raising the visible opportunity cost of holding gold, which yields nothing. When hike probability recedes, that cost differential narrows.
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