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When interest rate increases by FED, then the dollar appreciates. Discuss the previous statement. AND what...

When interest rate increases by FED, then the dollar appreciates. Discuss the previous statement. AND what is its impact on Gold, Bonds prices?
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Answer #1

Higher interest rate generaaly tends to appreciate the local currency since the demand for local currency is expected to increase because institution/ individual from foreign natiin would like to invest in domestic currency in expectation of higher interest earned and hence, appreciating the currency.

Rising interest rate makes the bonds and other investment avenues more lucrative then gold and hence gold prices drops and Bond Prices will also decrease to match the increase yield

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