The Federal Funds Rate is the interest rate that the US Federal Reserve sets for banks lending money to each other overnight. It's the most powerful interest rate in the world — it ripples through mortgages, car loans, credit cards, and government bonds.
When the Fed raises this rate, borrowing becomes more expensive everywhere. When it cuts, borrowing gets cheaper.
How does it affect gold?
High Fed rates are generally bad for gold. Here's why: when you can earn 5%+ safely in a bank account or Treasury bill, why would you hold gold that pays nothing?
Conversely, when the Fed cuts rates, safe investments earn less. Gold becomes relatively more attractive, and investors rotate into it.
The key is *expectation*: gold often rises before the Fed actually cuts, because investors buy gold in anticipation of falling rates.