Gold prices weakened to around $1,660 an ounce on Thursday, sliding back towards the lowest levels in over two years, weighed down by a rallying dollar as the Federal Reserve delivered its third straight 75 basis point rate hike and signaled further tightening ahead to bring down inflation. Other central banks from Europe to Asia have also been raising interest rates this week, with European Central Bank President Christine Lagarde saying that the ECB might need to increase rates to restrictive levels to stem demand and combat surging inflation. Higher interest rates raise the opportunity cost of holding non-yielding bullion, denting its appeal. Gold also lost its shine as a store of value in times of economic uncertainties as the US’ relative economic strength and the Fed’s aggressive stance against inflation lifted the dollar at the expense of other safe-haven assets.Stock market indexes in Europe fell more than 1% on Thursday, taking cues from Wall Street and Asian peers overnight, after the US Federal Reserve hiked interest rates for a third straight time and signaled more increases should be delivered in future meetings as policymakers try to subdue stubbornly high inflation. Elsewhere, the Bank of England will likely raise rates by 75 basis points today, while European Central Bank board member Isabel Schnabel said monetary policy should be tightened further to combat inflation, even as the Eurozone faces an economic downturn.
