Gold stabilizes near two-year low after a series of rate hikes

Gold stabilized near a two-year low after a string of higher interest rates to curb inflation.

Bullion lost up to 1.1% on Thursday after Japan stepped into the foreign exchange market to support its currency, pushing bond yields up and the dollar falling. Gold is trading near a two-year low and could be bearish with the dollar at record levels.

Weakness in bullion is likely to continue due to monetary tightening making gold more expensive to keep, but recession fears and any escalation in Russia and the Ukraine conflict could support prices.

Central banks in Switzerland, Norway, and the UK have followed the Fed’s policy and announced an increase in interest rates. Gold that is priced in US currency usually has a negative correlation with the dollar and rates.

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The outflow from exchange-traded funds has continued, and assets are now at almost the lowest level this year. The US purchasing managers index data will provide further indication of how the economy is coping with higher interest rates.

Gold could be a safe haven as the global outlook worsens and with Wall Street confident we are nearing a peak with Treasury yields. The metal has support at $1660 and if it stabilizes above, prices could eventually bounce back above the $1700 level.

Spot gold was 0.2% lower at $1668 an ounce in London this morning, leaning toward slight weekly losses. Silver, platinum, and palladium have fallen in price.