Gold prices on track for second weekly loss on higher global interest rates

Gold prices declined in European trade for another session, almost hitting 29-month lows and on track for the second weekly loss in a row as global central banks continue to tighten their monetary policies and hike interest rates, hurting demand on non-yielding assets such as gold. 

US 10-year treasury yields surged to 12-year highs after the Federal Reserve raised rates by 75 basis points to 3.25%, the highest since 2008.

Prices Today

Gold prices fell 0.4% to $1,665 an ounce, after losing 0.2% yesterday, hovering near 29-month lows at $1,653.

Gold is down 0.6% so far this week and on track for the second weekly loss in a row on higher interest rates. 

Global Central Banks

As expected the Federal Reserve hiked interest rates by 75 basis points for the third meeting in a row to 3.25%, the highest since 2008.

The Fed intends to maintain its bullish stance against inflation, raising rates to 4.5% by the end of the year, which means we have 125 basis points of rate hikes in the last two meetings of the yer.

The Fed is aiming for the neutral 4.75% level for interest rates, which means raising rates by just 25 basis points in 2023.

Jerome Powell

Fed Chair Jerome Powell said his message hasn't change since Jackson Hall, with the Federal Open Market Committee aiming to cut inflation 2% through aggressive policy tightening until it's done.

Swiss National Bank

Swiss National Bank decided at its September 22 policy meeting to increase interest rates by 75 basis points to 0.5%, returning to positive ground for the first time since 2011, matching analysts expectations, and it's the first such hike since 2007.

Otherwise, Bank of England also voted to increase interest rates this week by 50 basis points to 2.25%, the highest since 2008.

US Yields

US 10-year treasury yields rose 0.5% on Friday to 12-year highs at 3.738%, and potentially are heading for 4%. 

The SPDR 

Gold holdings at the SPDR Gold Trust fell 2.03 tones yesterday, the fifth such decline in a row to a total of 950.13 tones, the lowest since March 2020.