Gold prices retreat as Fed, CBRT actions counter record highs

Despite breaking records last week, gram gold sees a reversal as central bank actions and a dollar pullback weigh in, with the current gold rate standing at TL 2,237

Last week, gram gold broke all-time records in the free market, surpassing TL 2,300. However, it starts the new week trailing approximately 3% behind its peak.

The rapid ascent of gram gold, triggered by the March 20 Federal Reserve (Fed) decisions, reversed course on March 21 following actions by the Central Bank of the Republic of Türkiye (CBRT), along with a retreat in the dollar. The reversal in gold came as the price of ounce gold also pulled back from its $2,222 peak, resulting in a reversal of gains in gram gold. While the dollar weakened due to the impact of interest rate decisions, this trend is also tempering gains in gram gold.

Gold Price on March 25: What’s the Current Rate?

The gram gold price on March 25 starts the new week in the free market at TL 2,237. In the Grand Bazaar, the selling price of gram gold stands at TL 2,500. In the morning hours, quarter gold is being sold at TL 4,245, half gold at TL 8,267, and full gold at TL 16,880. These prices indicate limited gains compared to last week’s closing. On the global stage, the price of gold traded in ounces begins the first trading day of the week around $2,170, showing modest gains.

Current situation of US Treasury yields and dollar index

Meanwhile, there has been a noticeable divergence in the movement of the U.S. 10-year Treasury yield and the Dollar Index (DXY) over the past few days. Since both indicators signal the strength of the dollar, they also influence gold prices. Following the Fed’s “dovish” messages, the U.S. 10-year Treasury yield had retreated from 4.35% to 4.2%. However, last week, the Bundesbank announced expectations of a recession in Germany for the first quarter, causing the euro and U.S. dollar pair to fall from 1.095 to 1.08.

Eyes on gold

Germany’s economy contracted by 0.3% in the final quarter of last year. This outlook affected the euro and U.S. dollar, and the DXY increased from 103 to 104.5. This indication of “strengthening in the dollar” also pressured gold prices after a mini-rally following the Fed. Despite this, gold has been hovering above $2,150 over the past three weeks, approaching the 22-day average.

Expectations and targets for gram gold

Economists note an increase in physical demand for gold due to hedging against high inflation and post-election uncertainty, alongside concerns about import restrictions. They warn that the significant price difference seen in jewelry stores could be risky for short-term purchases but could present gradual buying opportunities for medium and long-term investors. Following the terrorist attack in Russia, analysts caution that Moscow’s response could escalate geopolitical risks.

Source: Newsroom

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