Gold Hits 11-Month High, Nears $2,000 Per Ounce Amid US Banking Crisis

Gold prices hit 11-month highs on Friday, breaking from the clutches of mid-$1,900 per ounce to head for bullion bulls' long-term target of $2,000, as the US banking crisis drives more investors toward safe havens

NEW YORK (UrduPoint News / Sputnik - 18th March, 2023) Gold prices hit 11-month highs on Friday, breaking from the clutches of mid-$1,900 per ounce to head for bullion bulls' long-term target of $2,000, as the US banking crisis drives more investors toward safe havens.

"The return of bank angst is sending gold prices sharply higher," Ed Moya, analyst at online trading platform OANDA, said. "Many gold investors are looking at the short-term macro risks and it seems that a wide range of expectations should mostly be positive for bullion."

Gold rallied as oil prices fell 13% on the week for one of their worst weekly losses since the outbreak of the coronavirus pandemic three years ago. Stock prices on Wall Street were also weaker.

Benchmark April gold futures on New York's Comex settled at $1,973.50 an ounce, up $50.50, or 2.6%, on the day. For the week, April gold was up by $106.30, or 5.7%. Friday's session high was $1,980.50, a peak not seen in Comex gold since its $1,985.10 high registered on April 19, 2022.

The spot price of bullion, more closely followed than futures by some traders, was at $1,973.92 by 1:55 p.m. ET (17:55 GMT), up $54.37 or 2.8% on the day. The session high for spot gold was $1,975.24, also marking an 11-month peak.

Spot gold's charts indicated that a test of the $2,000 level was possible so long as the current momentum holds, chartist Sunil Kumar Dixit said.

"Today's insane rally in gold shows that more people are turning to gold as a safe haven and store for value as the banking credit crisis continues to grow and spread," Dixit, chief technical strategist at SKCharting, said. "From this point on, so long as prices sustain above $1,960, we can witness a continuation of the momentum reaching for the psychological barrier of $2,000.

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The last time spot gold peaked at above $2,000 was in March 2022 when it hit $2,070.29, almost matching its record high of 2,072.90 from August 2020.

Gold prices have been on a tear since the US banking crisis erupted a week ago with the takeover of two mid-sized lenders - Silicon Valley Bank and Signature Bank - by the Federal Deposit Insurance Corp as depositors yanked billions of dollars from them after fearing for their solvency. Silicon Valley Bank filed for bankruptcy protection over the past 24 hours. A third bank, First Republic, is also in trouble despite receiving a $30 billion cash infusion from a consortium of banks.

Elsewhere, the banking crisis has spread to Europe, with Credit Suisse Group, one of the world's preeminent names in investment banking, seeking help from Switzerland's central bank.

Persistent interest rate hikes by the Federal Reserve have also exacerbated fears that the US economy could end up in a deep recession.

Whichever way the US central bank leans now could be a boon for gold, senior market analyst Ed Moya said.

"If the Fed is done with rate hikes, that should be bullish for gold as it puts a short-term cap on the dollar," Moya said. "If inflation proves to be stickier and the Fed has to resume tightening, that would deliver a major blow to the economy and trigger many safe-haven flows for gold."

Gold could hover at around $1,950 leading up to the Fed's next rate decision on March 22 and Wall Street might have a better handle after that on how bad a recession the United States may be facing. Moya said.

"Safe-haven flows into gold should be steady as the economy enters a recession," he added.