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Gold Prices Fall 3rd Straight Day on Turkish Central Bank chief’s Ouster

Gold prices fell on Monday as Turkey replacing its central bank governor with a high interest rate critic led to investors flocking towards the safety of the dollar, on fears that the move would threaten other financial markets.

Spot gold fell 0.3% to $1,739.80 per ounce by 0052 GMT. U.S. futures on the yellow metal were down 0.2% at $1,738.80 per ounce.

President Tayyip Erdogan, on Saturday, unexpectedly fired Turkey’s central bank chief, Naci Agbal, replacing him with a former ruling party legislator and opponent of tight monetary policy, Sahap Kavcioglu.

Concerns that developments in Turkey would threaten other financial markets strengthened the dollar, making gold expensive for non-U.S. investors.

Meanwhile, Federal Reserve Chair Jerome Powell, told Wall Street Journal the United States would pull out of the crisis “stronger and better, as we have done so often before.”

Gold Price Chart
Gold
Gold Prices, One Year Price Chart

Also, big U.S. banks will have to resume holding an extra layer of loss-absorbing capital against U.S. Treasuries and central bank deposits from next month after the Fed said on Friday it would not extend a temporary pandemic regulatory break due to expire this month.

Last week, yields spiked on the longer end of the curve, fueled by the Fed policy meeting, boosting economic growth expectations for 2021.

Higher yields lift the opportunity cost of holding non-yielding bullion.

Hedge funds and money managers raised their bullish positions in COMEX gold and cut them in silver contracts in the week to March 16, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday.

SPDR Gold Trust, the world’s largest exchange-traded fund backed by the yellow metal, said its holdings rose 0.3% to 1,051.78 tonnes on Friday from 1,048.28 tonnes on Thursday.

Palladium rose 0.2 % to $2,641.18, Silver fell 1.2% to $25.92 and platinum was down 1.3% at $1,181.28.