Tuesday, October 3, 2023
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Gold eases as banking sector reprieve slows safe-haven flows

By Kavya Guduru
(Reuters) – Gold edged lower on Tuesday as an improvement in risk appetite after efforts by regulators to allay fears over the global banking system slowed safe-haven inflows into bullion.

Spot gold was down 0.1% at $1,955.60 per ounce as of 0731 GMT. U.S. gold futures rose 0.1% to $1,956.60.

Stemming further declines in gold was a pullback in the dollar. [USD/]

Some profit-taking after gold recently touched the $2,000-level and hopes of a resolution to the banking crisis have added up to some significant position-squaring in gold, said Clifford Bennett, chief economist at ACY Securities.

Gold declined more than 1% on Monday as investors scaled back on safe-havens in favour of riskier assets after First Citizens BancShares said it would take on the deposits and loans of failed Silicon Valley Bank. [MKTS/GLOB]

However, gold remains the “resolute safe-haven” in a “rolling risk environment” for the banking sector, as risks of contagion are far more persistent than the market would like to believe, Bennett added.

Focus also remained on the U.S. Federal Reserve’s interest rate strategy, with markets pricing in a 51% chance of the Fed standing pat on rates in May, according to the CME FedWatch tool.

Higher rates increase the opportunity cost of holding the zero-yield gold.

“Near term, gold may struggle to break through to new highs … However, with Fed rate cuts coming once the U.S. economy enters recession, bond yields are likely to fall and the gold price may resume its climb,” Heraeus Precious Metals said in a note.

Gold might break resistance at $2,070 in the second quarter and rise towards $2,148, Reuters technical analyst Wang Tao said.

Silver fell 0.7% to $22.94 per ounce and platinum lost 0.5% at $967.32, while palladium was up 0.3% at $1,412.73.

GRAPHIC: xau- https://fingfx.thomsonreuters.com/gfx/ce/jnpwyjrkrpw/Pasted%20image%201679979674607.png

(Reporting by Kavya Guduru in Bengaluru; Editing by Sohini Goswami and David Holmes)

Disclaimer: This report is auto generated from the Reuters news service. ThePrint holds no responsibilty for its content.

Source: The Print

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