WASHINGTON (dpa-AFX) - Gold futures settled sharply higher on Wednesday as the dollar tumbled and bond yields dropped after the Bank of England decided to intervene in the bond market to begin purchasing long-dated U.K. government bonds to address dysfunction in the gilt market.
Gold prices tumbled to a 29-month low earlier in the session as hawkish comments from several Fed officials lifted the dollar to a fresh 2-decade high.
The dollar index, which surged to 114.78 in the Asian session, dropped to 112.59 this afternoon, and was last seen at 112.77, down 1.17% from the previous close.
The yield on the benchmark ten-year note dropped by 22.9 basis points to 3.735%.
Gold futures for December ended higher by $33.80 or about 2.1% at $1,670.00 an ounce, the highest close since September 22.
Silver futures for December ended up $0.543 at $18.880 an ounce, while Copper futures for December settled at $3.3585 per pound, gaining $0.0750.
The BoE's move comes as bond yields in the UK market spiked after the government revealed its mini-budget including unfunded tax cuts.
The BoE said the purchases would be carried out on 'whatever scale is necessary' to restore orderly market conditions.
In addition, the BoE postponed the selling of bonds held under the quantitative easing program to October 31. The sale was initially due to commence next week.
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