Gold prices plummeted today as global central banks implemented interest rate hikes, putting pressure on the precious metal. The Bank of England and Norway’s central bank both raised their main interest rates by 0.5%, while the Swiss National Bank increased its policy interest rate by 25 basis points.
The hawkish sentiment was further echoed by Federal Reserve Chairman Powell during his testimony to a U.S. Senate committee. Powell reiterated the Federal Reserve’s concerns about inflation levels that currently exceed the central bank’s 2% annual target area. He also hinted at the likelihood of two more interest rate hikes this year, without specifying the exact timing.
The anticipation of higher interest rates in the United States has significantly impacted the price of gold. This is primarily due to the increased opportunity cost of holding bullion when interest rates rise.
Gold (XAU/USD) had been trading within a narrow range of $1,930 to $2,000 for the past four weeks. However, today marked a significant break to the downside, with the yellow metal currently trading at $1,914.
