Gold prices slip amid tightening monetary policy by central banks

Gold prices plunged today, Sept. 22, on the tendency of central banks to tighten their monetary policy further to combat rising inflation.

Gold futures for December delivery slipped 0.32% $1,670.40 an ounce at 11:06 am Makkah time, with spot prices also down 0.38% to $1,666.53 per ounce.

Silver futures for December delivery, meanwhile, saw a marginal rise of 0.1% to $19.50 an ounce. However, the spot price of platinum dipped 0.44% to $903.48 per ounce, with the spot price for palladium also shed 0.50% to $2,146.38 an ounce.

The main dollar index, which measures the performance of the US currency against a basket of six currencies, fell 0.24% to 111.07 points, albeit still trading near its highest levels in two decades.

The Federal Reserve decided yesterday, Sept. 21, to raise the US interest rate to the range of 3-3.25%, the highest level since the 2008 financial crisis. This raised expectations that the interest rate would reach 4.4% by the end of 2022, hitting 4.6% next year.

“While high interest rates, slow growth and weak labor market conditions will lower inflation, they will also bring some pain to households and businesses. These are the unfortunate costs of lowering inflation. But a failure to restore price stability would mean much greater pain,” Fed Chairman Jerome Powell said in a press conference following the decision.

Today, the Swiss National Bank announced a major 75-basis-point (bp) interest rate hike. Meanwhile, investors are awaiting the Bank of England's decision later today, amid expectations of a 50 to 75-bp interest rate increase.