Shaikh Financial Services

QUESTIONS? CALL: 051-2525412
  • HOME
  • ABOUT US
    • Our Company
    • Our Mission
    • Our Philosophy
    • What We Aspire
    • Our Clients
    • Our Approach
  • OUR SERVICES
    • Research and Analytics
    • Subscriptions
    • Financial Planning
      • Overview
      • Children Education
      • Children Marriage
      • Wealth Creation
      • Retirement Plan
      • Tax and Estate Planning
      • Insurance/Takaful Planning
    • Wealth Management Advisory
      • Overview
      • Our Process
      • Investment Approach
      • Asset Allocation Strategies
      • Risk Management & Monitoring
    • Financial Consultancy
    • Startup Advisory
    • Trainings and Education
    • Real Estate Advisory
    • Taxation Consulting
  • WHY US
    • Overview
    • Why our Preference
    • Expertise
    • Fee Only Advisor
    • Safety of Funds
    • Becoming a Client
  • MISCELLANEOUS
    • Appointments
    • Disclaimer
    • FAQs
    • Testimonials
  • BLOG
  • CONTACT US
    • Careers
    • Contact Us

How GLD reacts to FED Funds Rate Change

by SFS Research / Wednesday, 13 January 2016 / Published in Commodities

Although theory says that GLD price should decline after an interest rate hike and it should grow after an interest rate cut, history shows that this anticipation is often wrong. The financial markets always try to predict the future development, and the interest rate change is often reflected by the asset prices before the rate change itself is officially announced. And if there was a strong trend before the rate change, the trend may get disrupted for some time, although it tends to resume after the dust settles down.

22 interest changes occurred since Year 2005. In 12 cases, the interest rate was increased and in 10 cases it was decreased. The table attached shows the development of GLD price 20, 10 and 5 trading days before the rate change and 5, 10 and 20 days after the rate change.

It is interesting that on average, GLD price grew before the interest rate change and it was in a slight decline 5 and 10 trading days after the rate change. But 20 trading days after the rate change, it was back in green numbers.

gold fed

 

Only in 4 out of 12 cases (33.33%), the GLD price recorded any losses 20 trading days after the interest rate hike. It declined by 4.73% on average. On the other hand, in 66.66% of cases, the GLD price recorded gains (5.08% on average). In 4 cases (33.33%), the GLD price just kept on growing, without any reaction on the interest rate hike.

After the Fed started to cut the interest rates, GLD was down in 50% of the cases after 20 trading days. After the interest rate cuts on March 18, 2008, October 8, 2008 and December 16, 2008, a strong growth trend turned into a steep decline. It shows that GLD often reacts contrary to the theory not only after interest rate hikes but also after interest rate cuts.

Note: (GLD is the Ticker name for SPDR Gold ETF)

This is a Re-Post of our Facebook Page Post.

SFS Research

  • Tweet

About SFS Research

What you can read next

Bitcoin: TOP In The Making, Free Exclusive Trade Call
GOLD: Swing Trade Alert !!
GOLD: Target Price Update

Recent Posts

  • Where is the PKR heading ?

    ...
  • Bitcoin: What’s Next ?

      Bitcoin is currently trading at $11,500,...
  • Bitcoin Trade Call Update.

    Bitcoin recently made a low of $9200 and is in ...
  • Bitcoin: TOP In The Making, Free Exclusive Trade Call

      Bitcoin is currently trading just under ...
  • Protected: PSX Strategy For Investors

    There is no excerpt because this is a protected...

Categories

  • Commodities
  • General
  • Stocks
  • Uncategorized

Shaikh Financial Services, a global trusted name in the financial services arena, offers the entire gamut of financial services under one roof. We provide our clients integrated, robust and reliable solutions. Clients turn to us for our unbiased data driven research, advisory, consultancy and financial planning. Our goal is to create wealth for our retail and corporate clients through data analytics, sound research and appropriate strategies.

  • OUR COMPANY
  • FEE STRUCTURE
  • OUR CLIENTS
  • RESEARCH & ANALYTICS
  • FINANCIAL PLANNING
  • WEALTH ADVISORY
  • FINANCIAL CONSULTANCY
  • STARTUP ADVISORY
  • REAL ESTATE ADVISORY
  • TRAININGS & EDUCATION
  • SUBSCRIPTIONS
  • APPOINTMENTS

FOR APPOINTMENTS

Call, WhatsApp or Email us at:
Pakistan: +92 331 9996699
International: +971 50 824 5340
Email: info@shaikhfinancialservices.com

Address: Main Boulevard, Civic Centre,
Bahria Town, Islamabad-Rawalpindi.

  • GET SOCIAL
Shaikh Financial Services

© COPYRIGHT 2009-2022 SHAIKH FINANCIAL SERVICES, ALL RIGHTS RESERVED.

TOP
error: Content is protected !!