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AGE Daily Gold Update presents a recap on today's action in the precious metals markets. View archives.


3/13/2023: Gold surges as yields, dollar tumble

Source: Bill Musgrave, American Gold Exchange

Austin — Gold surged 2.6% higher to close above $1,916 as investors flooded into safe-haven assets after the failure of two big banks required interventions by the government. It was the metal's highest finish in five weeks.

The rapid collapse of Silvergate and Silicon Valley Bank late last week, the biggest since 2008, is sending tremors through the markets as fears of contagion grow. While financial shares plunged along with investor confidence on Wall Street, the Fed announced a new emergency loan program for banks in trouble and the FDIC scrambled to reassure panicky depositors.

Benchmark 10-year Treasury yields dropped below 3.6% as investors rushed into the perceived safety of government debt. The shift marked the biggest three-day tumble since March 2020, during the open stages of the pandemic. Falling yields lift gold by lowering the opportunity cost for holding it instead of bonds a safe-haven asset.

Meanwhile, 2-year Treasury yields, closely aligned with the Fed funds rate, shed more than 55 basis points for the biggest one-day decline since Black Monday in October 1987.

With many analysts attributing the bank failures, at least in part, to the most aggressive rate-hike cycle in a generation, the outlook for further hikes is rapidly changing. One week ago, Fed funds futures traders saw a 44% likelihood of a 50-basis-point hike at the Fed's Mid-march meeting. Now they are pricing-in the same chance of no hike at all.

The dollar dumped 0.9% on the newly dovish rate view, supporting gold and other commodities by making them less expensive in other currencies.

The other precious metals were also sharply higher, with silver rising 6.9% while platinum and palladium picked up 4.4% and 8.4%, respectively.

At the Comex close: April gold gained $49.30 to $1,916.50; May silver jumped $1.40 to $21.92; April platinum climbed $42.70 to $1,004.90; and June palladium surged $114.40 to $1,476.70 an ounce.

  

Metal Ask      Change
Gold $2,220.36           Price Change Up Arrow $19.57
Silver $25.00           Price Change Up Arrow $0.18
Platinum $921.01           Price Change Up Arrow $10.65
Palladium $1,056.97           Price Change Up Arrow $28.38
In US Dollars