Gold pops to highest close in over year after central banks’ moves

Gold prices rose to the highest close in more than a year today, March 23, as markets gauged the impact of emergency liquidity measures from the Federal Reserve and other major central banks in a bid to cool the recent banking crisis.

On March 22, the Fed raised interest rates by 25 basis points (bps), with an eye for an additional rate hike this year.

In a press conference following the US central bank’s policy decision, Fed Chair Jerome Powell said that what lies ahead for the economy may be “uncertain,” but rate cuts are not currently in the central bank’s “baseline expectation.”

Mirroring the Fed’s rate hike, the Bank of England opted today for a 0.25 percentage point increase in its key rates to a new 15-year high of 4.25%.

Following its peer economies, the Swiss National Bank lifted interest rates by 50 bps, while Norges Bank, the Norwegian central bank, announced a 25-bp hike earlier this morning.

The uptick in bullion prices came amid a noticeable drop in US Treasury yields, wherein the two-year yield contracted to 3.89%. Further, the yield on the benchmark 10-year Treasury note slipped to 3.443%.

In terms of trading, gold for April delivery leapt 2.4%, or $46.30, to close at $1,995.90 an ounce — the highest settlement since March 10, 2022.

On the other hand, the US dollar index, which gauges the greenback's strength against a basket of six currencies, kept flat at 102.32 points at 8:47 pm Makkah time.