NEW YORK: Gold prices fell more than 1% on Monday as worries over a crisis in the banking sector subsided, prompting investors to scale back safe-haven trades in favour of riskier assets like equities and crude oil.
Spot gold dropped 1.2% to $1,953.14 per ounce by 10:25 a.m. EDT (1425 GMT). US gold futures fell 1.5% to $1,954.40.
There is a sense of calm in the markets and a flight back into some of the risk-on assets, and all the safety trades like gold are starting to sell off, said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.
A buyer for Silicon Valley Bank’s deposits and loans helped Wall Street’s main indexes open higher, sending gold further below the $2,000 mark breached last week.
“Much of the rally on the gold market was really short-covering,” Streible said, adding that prices were likely going to continue to come under pressure. Recent banking sector stress and the possibility of a follow-on credit crunch bring the US closer to recession, Minneapolis Fed president Neel Kashkari said. However, US Federal Reserve officials said there was no indication financial stress was worsening.
“After kissing the psychological $2,000 level last week, bears exploited this resistance to attack. Appetite for the precious metal has also been dampened by a stabilising dollar and mixed signals on monetary policy from the Fed,” said Lukman Otunuga, senior research analyst at FXTM.
Last week, the Fed indicated it was on the verge of pausing further increases in borrowing costs, boosting non-yielding gold’s appeal.
Source: Brecorder
