Gold
rose to a six-week high early on Monday, topping the US$1,900 mark for
the first time since early February as the dollar and bond yields sank
after regulators seized two US regional banks.
Gold for April delivery closed up US$49.30 to settle at US$1,916.50 per ounce, the highest since Feb.2.
The
rise follows on the seizure of the Silicon Valley Bank and the
Signature Bank amid rising interest rates, raising fears of a wider
banking crisis in the United States. The Biden Administration looked to
calm the waters by guaranteeing all deposits at the two institutions
while the Federal Reserve created a new facility to backstop bonds held
by stressed banks.
Still, the dollar and bond yields
were both sharply lower following the seizures, with investors expecting
the Federal Reserve to pause interest-rate hikes in order to calm
markets.
"Gold together with US government bonds have
seen strong safe-haven demand since Friday as the SVB fallout has led to
concerns about contagion in the banking sector. Two of gold's main
engines, the dollar and treasury yields have both seen a sharp drop
since Friday ... Gold will likely benefit from continued worries about
the financial system, increased recession worries and a swap market now
pricing in just one rate hike ahead of a December cut," Saxo Bank noted.
The ICE dollar index was last seen down 1.04 points to
103.53, while the US 10-year note was paying 3.528%, down 17.7 basis
points.
Sources: Newswire