Gold reaches best level in almost a week

Gold prices soared on Wednesday, bolstered by a deep cutback in global bond yields and a weaker US dollar. In the afternoon trade, the Gold Index was up about 2% to $1,670, its best level since last Thursday.

Gold is trading at 1659.38 at the time of writing, so it is still hovering around 1660 per ounce versus Tuesday’s closing price at $1628.56. During the day, the Dollar Index retreated more than 1% as the US Treasury curve shifted sharply lower, with the 10-year note sinking more than 20 basis points to 3.80% from its multi-year high of 4.01% set in the overnight session.

Meanwhile, the plunge in UK rates was more forceful. The yield on gilts maturing in 30 years fell more than 130 basis points to 3.92%, the largest one-day drop since 1992.

Volatility in the fixed income space was undoubtedly triggered by the BoE’s unexpected “quantitative easing” decision. For context, BoE announced a dramatic intervention in the bond market to stave off a crash, pledging unlimited purchases of long-term debt, despite ongoing efforts to tighten monetary policy in the fight to tame sky-high price pressures.