Gold shines once again, as its price briefly topped the $2,000 key level on Monday morning for the first time since early March 2022, as the domino collapse of Silicon Valley Bank, Signature Bank, and Credit Suisse fuelled worries of broader banking and financial instability and drove investors to the safety of the all-time haven yellow metal.
The price of gold rose as high as $2,014/oz early Monday morning, before retracing to below $1,980/oz on the day on improved risk sentiment and some profit-taking trades since it performed strongly during the last weeks.
Gold price, 1-hour chart
A similar picture is seen on the other bullion, Silver, which its price climbed as high as $22,70/oz in the same period, before retreating to nearly $22/oz on the day.
Bullion extended last week’s strong gains on growing fear over the health of the U.S. banking sector despite the move by 11 major U.S. Banks to pledge a deposit totaling $30 billion of cash in the embattled First Republic Bank, to bolster confidence in the banking system, and to stop a spreading panic following a pair of recent bank failures.
Dollar-denominated and zero-yield gold has also got a boost from a softening U.S. dollar and bond yields, as investors expect that the recent banking crisis could cause Federal Reserve to pause or hike by a lower speed than initially expected, to avoid further pressure on the already fragile economic system.
The DXY- dollar index fell as low as 103.40 this morning, its lowest since mid-February, while the yield on the 2-year Treasury notes briefly retreated below 3.70%, making gold and silver more attractive for buyers with foreign currency.
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