Gold nears $1,900 as investors seek refuge from uncertainty caused by the Silicon Valley Bank bankruptcybut are encouraged by bets that the Federal Reserve may be forced to moderate rates.
Spot gold was up 0.9% at $1,885.37 an ounce. Early in the session, prices reached their highest since early February at $1,893.96. US gold futures were up 1.2% at $1,889.50.
On Friday, gold gained 2% after Californian regulators shut down Silicon Valley Bank (SVB). Regulators also closed New York-based Signature Bank on Sunday.
“The latest developments show that gold remains a safe haven asset as it can benefit from market uncertainty. Furthermore, market participants writing off rate hike expectations is boosting gold,” he said. Giovanni Staunovo, an analyst at UBS (SIX:UBSG).
*Lower interest rates reduce the opportunity cost of holding gold, which does not earn interest.
Following the collapse of the SVB, traders now expect the Federal Reserve will not raise interest rates by 50 basis points this month, in contrast to the 70% probability that existed before the event. Rate cuts are also expected by the end of 2023. Goldman Sachs (NYSE:GS) said on Sunday that it no longer expects the Federal Reserve to raise rates at its March 22 meeting.
ANDGold was helped by the simultaneous decline in the dollar index, making bullion cheaper for foreign buyers.
Meanwhile, the US authorities announced a series of measures to deal with the financial consequences of the bankruptcy of the SVB, but the stock market continued to sell off on the European markets.
Among other precious metals, silver was up 1.4% at $20.80 an ounce, platinum was up 0.7% at $966.29 and palladium added 1.1% to $1,393.38.
Source: Ambito
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