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Below is View On US Fed announcement By Chirag Mehta, Sr. Fund Manager- Alternative Investments. Quantum Mutual Fund

The Federal Reserve on Wednesday hiked it's key interest rate by 25 basis points. This move was largely priced in given the elevated US inflation prints in January and February and the expected spillover impact on global energy and commodity prices from the sanctions on Russia.

A lot has happened since the last FOMC meeting in January. As expected , the Fed skipped a 50 basis point hike given the geopolitical uncertainty and resulting growth vulnerabilities. This less aggressive policy stance of the Fed was welcomed by markets. While the Fed maintained that more hikes were on the table, it remains to be seen how it strikes a balance between containing inflation and supporting the economic recovery from the pandemic.

That's because higher rates can slow down inflation but they can also increase cost of borrowing and slow down the economy. Economic indicators like the US Treasury Yield curve, US consumer confidence, US retail sales are pointing to a weakening growth outlook. While the Fed is already behind the curve when it comes to taming inflation, ill-timed tightening comes with the risk of triggering a recession. In summary, potential  softening of the Fed's stance on tightening and macroeconomic uncertainty bodes well for gold.

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