Gold is set for its best monthly performance since July 2020 after demand for the ultimate haven asset surged amid the collapse of three US banks.
The final day of March has seen the price of gold dip slightly as investor confidence has picked up a fraction amid hopes that the worst of the banking crisis has passed.
However even with today’s dip to around $1,975 an ounce, gold has still gained almost $150 an ounce from where it started the month.
The fact that gold has been able to achieve such a strong performance, even with the Federal Reserve and other central banks increasing their benchmark rates, illustrates how strong the haven demand has been.
It will be interesting to see how long gold can sustain these elevated levels as the macroeconomic outlook points to challenging times ahead for the precious metal, with Fed officials maintaining their hawkish rhetoric despite the recent banking failures. Central banks’ primary concern remains stubbornly high inflation, with interest rate raises as their favoured tool to bring fast-rising consumer prices back under control.
Therefore, if the banking crisis does prove to be curtailed then investors that bought into gold in a hurry may return back to equities. A return to a risk-on-trading approach allied with the prospect of further rate hikes to come points to a challenging April for gold after a stellar March.
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.
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