Gold drops to lowest level in more than two years after interest rate hikes

Gold drops to lowest level in more than two years after interest rate hikes
Gold drops to lowest level in more than two years after interest rate hikes

Bloomberg — Gold has racked up a second weekly decline after a series of central banks around the world followed the Federal Reserve (Fed) in raising interest rates to try to cool inflation..

Gold fell to its lowest level on Friday (23), with the dollar at a record high. The precious metal fluctuated between gains and losses on Thursday, down as much as 1.1% after Japan intervened in the currency market to strengthen the currency.causing bond yields to rise and the dollar to fall before recovering.

Gold weakness “will most likely persist” due to “currency tightening that makes it much more expensive to maintain”, said Gnanasekar Thiagarajan, director of Commtrendz Risk Management Services. “However, fears of recession and any escalation in the conflict between Russia and Ukraine could support prices.”

The central banks of Switzerland, Norway and the United Kingdom followed the Fed in announcing interest rate hikes to contain price increases.

Outflows of exchange-traded funds continued, with holdings now close to this year’s lowest level. Data from the US purchasing managers’ index due on Friday should give another indication of how the economy is coping with higher interest rates.

Spot gold was down 0.9% to $1,656.17 an ounce at 9:13 am ET, heading for a weekly loss. O Bloomberg Dollar Spot Index rose 0.7% to a record. Silver, platinum and palladium have dropped.

See more at bloomberg.com

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