Gold Rises Back Above US$1,900 as US Banking Turmoil Sinks the Dollar and Yields

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

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