Interest Rates:

The interest rate governs the borrowing relationship between the central bank and the commercial banks and between the latter and its individual and corporate clients.

The interest rate is the counterparty who has to pay for his debt to the lender. As individuals borrow from commercial banks and return money with interest, these banks return the money they borrowed to the central bank with interest.

The result is that the central bank gets profits and commercial banks make profits. The capital of all these institutions grows from the top to the smallest financial institution.

The central bank determines the interest rate based on several factors, including inflation and stagnation or economic growth. Consequently, commercial banks tend to set a higher interest rate by a specific difference from the central bank's rate of interest, which also ensures the return of money to the largest institution in the national financial system.

The currency rate may be the biggest factor in determining the perceived value of the currency, so knowing how a country's central bank puts its monetary policy, such as interest rate decisions, is crucial.

Effect of interest rate on borrowing activity

When the central bank decides to raise the interest rate, it means that the commercial banks that traders, importers, companies, factories and individuals will raise interest rates will reduce the financial activity of these groups that avoid borrowing in this case.

Effect of interest on gold

The price of gold is affected by interest rates and is globally affected by the US interest rate. When interest rates rise, investors invest in US Treasury bonds, which leads them to sell their assets of gold and to invest in bonds where profits are bigger and faster.