Even as the US banking sector is facing the worst period after the global recession in 2008-09 and amid the talks of recession, the safe-haven gold is gaining, with its price crossing the Rs 60,000 mark to its lifetime high. On the Multi Commodity Exchange, the gold future was on Monday trading 1.5 per cent higher at Rs 60,274 per 10 grams during the day.
In the international market also, gold was up 0.57 per cent to cross the $2,000 mark to trade at $2,001.6 an ounce. However, silver was, however, down 0.73 per cent to $22.54 an ounce in New York commodity exchange COMEX.
Rahul Kalantri, vice-president (commodities) of Mehta Equities, said, “In the aftermath of the American banking crisis, the gold market soared to a lifetime high. Bullion was purchased as a safe haven after the sudden fallout of the SVC bank and other banks. The US bond rates saw unprecedented weakness, the dollar index fell, and gold prices increased. In view of the banking crisis and conflicting US economic statistics, the US Federal Reserve is expected to convene this week on March 22. The policy outcomes may provide further guidance for the bullion markets."
Two banks in the US, Silicon Valley Bank and Signature Bank, have collapsed. While, Swiss lender Credit Suisse and US-based First Republic Bank are also struggling and securing support to survive.
Kalantri said gold, a safe haven asset, is currently in a very favourable financial and economic situation. “We anticipate a significant increase in price if gold closes over $2000 (spot), which could potentially occur at levels of $2070 and $2185. For domestic gold, the levels to watch after a close above Rs 60540 are Rs 61920 and Rs 64000. Yet, this week’s expected US Fed discussion is extremely significant."
Prathamesh Mallya, assistant vice-president (research)- non-agri commodities and currencies, Angel One, said, “Gold prices continue to surge northwards. Last week, bullion gained nearly 4 per cent given the rising uncertainty in the global markets due to the banking crisis. For the third week in a row, gold has increased in price as demand for safe-haven assets surged due to the US banking crisis."
He added that prices continued to head higher as the appeal of non-yielding gold increased because of predictions of less aggressive Federal Reserve rate increases following the failure of two significant US regional banks.
“Gold bullion prices in euros also rose to levels not seen since records were set last year, while gold prices in pounds reached a new high. The CPI, on the other hand, had a 6% increase in February, which was the smallest increase from the previous year since September 2021. The European Central Bank adhered to its goal to raise interest rates by 50 basis points in order to combat inflation," Mallya said.
On the outlook, he said, the break of Rs 60,150 levels is now going to prompt the price to move higher to Rs 60,790 levels.
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