Gold continues to benefit from concerns over the health of the US banking sector with the price surging comfortably above $1,900 an ounce to be trading at around $1,930.
Overall, gold has gained more than $100 an ounce since March 7th and is closing on its highest level for the year so far.
The latest news on the big US banks teaming up to shore up First Republic Bank with $30 billion in deposits of their own money has highlighted that fears over contagion are well-placed after the collapse of first Silvergate, then Silicon Valley Bank and Signature.
With the banking sector looking shaky, investors have turned to the ultimate haven asset that has survived through centuries of conflict and stock market crashes – with gold’s lack of counterparty risk particularly attractive at times such as these.
It is worth noting that the European Central Bank still increased its benchmark rate by 50 basis points (as was originally expected) and didn’t choose to alter its approach despite the troubles Credit Suisse is facing – reminding investors that this isn’t a uniquely American problem.
As such, this increases the likelihood of the Federal Reserve also sticking to its plan of another hike when it meets next week so with rates continuing to rise that is likely to put a cap on how gold can climb.
Rupert is a Market Analyst for Kinesis Money, responsible for updating the community with insights and analysis on the gold and silver markets. He brings with him a breadth of experience in writing about energy and commodities having worked as an oil markets reporter and then precious metals reporter during the seven years he worked at Bloomberg News.
As well as market analysis, Rupert writes longer-form thought leadership pieces on topics ranging from carbon markets, the growth of renewable energy and the challenges of avoiding greenwash while investing sustainably.
This publication is for informational purposes only and is not intended to be a solicitation, offering or recommendation of any security, commodity, derivative, investment management service or advisory service and is not commodity trading advice. This publication does not intend to provide investment, tax or legal advice on either a general or specific basis.