The hikes are not as much an attempt to stave off inflation as they are designed to attract investment into the dollar by would-be debt holders (China, Japan, etc.) of the U.S. currency.
More Quotes from Jon Nadler:
Traders were watching a sinking dollar and the apparent diversion of petro-dollar profits into bullion (a repeat of the pattern that was last visible in the gold run of 1980).Jon Nadler
It will take either a sharp sequence of rate increases ... or a significant reversal of rate hikes ... to move the gold market in a meaningful way at this point.
Jon Nadler
The huge pool of global liquidity out there has not found a better place to rush into, and is enchanted with gold and its prospects.
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In the gold trading pits, economic uncertainties are taking a back seat to uncertainties of a different nature these days.
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Buoyed by the Nigerian oil sabotage news and a weaker U.S. dollar, gold has reasserted its safe-haven attributes since last Friday.
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