Gold approaches 29-month nadir on aggressive global policy tightening

Gold prices fell in European trade to near 29-month lows as global central banks continue to tighten monetary policies and increase interest rates, in turn hurting demand on non-yielding assets like gold. 

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 world's largest central bank asserted the path of policy tightening and rate hikes until March 2023 in an effort to rein in record inflation

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.

Gold Prices

Gold prices fell 1.1% to $1,655.67 an ounce, after rising 0.5% yesterday away from 29-month lows at $1,653 an ounce.

Gold prices rose as well yesterday amid mounting geopolitical tensions in Europe, after Russian President Vladimir Putin announced partial military mobilisation. 

The Federal Reserve

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. 

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.

Global Interest Rates

Bank of England is expected to increase interest rates by 50 basis points today to 3.25%, the seventh hike in a row. 

Higher rates hurt non-yielding assets, such as gold futures. 

The SPDR

Gold holdings at the SPDR Gold Trust fell 1.16 tones yesterday, the fourth decrease in a row, to a total of 952.16 tones, the lowest since March 2020.