Gold Refreshes 3-Month Lows After Outsized BoE Rate Hike
It appears that the gold bulls are trying really hard to hang in there, but the big picture isn't favoring them at all! The August Gold contract (front-month) on the NYC is trading near $1923.70/ounce after losing 1% of its value for the day.
Overall, that's the 4th day in a row that the Gold contract is on the back foot. If we look around, the gold futures from the USA were also down and trading near $1922.65. These values in the gold futures were only last seen during mid-March.
Spot Gold Down By 0.9%
If we look at spot gold, which tracks the price of physical bullion, it also lost 0.9% of its value, around $18.25. When checked last time, spot gold was trading near $1914.49, which is a 3-month low.
According to one analyst, the big-sized rate hikes from the Bank of England were the trigger that caused the Gold prices to go down. In addition, he also added that similar rate hikes from other EU central banks are also highly likely.
The overall picture of the global economy is not so good since the growth outlook is also getting slashed left and right. In theory, this could cause the funds to move towards the US Dollar due to its safe-haven status, but the same can't be said about gold.
For now, the catalyst that made the gold jump higher was the half-percentage point rate hike from the BoE. According to the UK's central bank, the rate hike was made to target inflation. In their defense, the central bank believes that inflation in the UK will take a long time to go down, which warrants more rate hikes.
After the recent rate hike, the interest rate in the UK now stands at 5%, which is one of the highest levels only last seen in 2008. In the USA, the Fed chair is also hinting at more rate hikes which tells us that the era of rate hikes is far from over!