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


3/15/2023: Gold jumps on banking worries

Source: Bill Musgrave, American Gold Exchange

Austin — Gold jumped 1.1% to close above $1,931 despite a sharply higher dollar as new worries about the global banking system spurred demand for safe-haven assets. It was the metal's highest finish in six weeks.

Credit Suisse plunged as much as 31% to a record low after deep losses in its bond portfolio threatened its viability. The possible failure of the Swiss banking behemoth, coming after two large US banks were shuttered last week, put the European banking sector under pressure.

Benchmark 10-year US Treasury yields tumbled under 3.5% as investors scrambled for the perceived safety of sovereign bonds. European government bonds also saw strong inflows, pressure yields overseas. Falling yields support gold by decreasing the opportunity cost for holding it instead of bonds.

Further pressuring yields, the Fed is expected to be less aggressive with interest rate hikes, given the turmoil and threat of contagion in global financial markets.

Fed fund futures traders now see a 45% likelihood that the Fed will stand pat on interest rates when it meets next week, with a 55% chance of quarter-point hike. One week ago, the odds of half-point hike were nearly 80%, with no chance of standing pat.

Weak manufacturing data and falling wholesale inflation also undermined the case for sharply higher interest rates. The Empire State factory gauge plunged under 25 in March, where anything under 50 signals contraction. And the PPI showed wholesale prices declining 0.1% in February, signaling less inflation in the pipeline.

Despite the increasing dovish rate outlook, the dollar rallied 1% on international flights to safety. Ordinarily, a stronger dollar weighs on gold by making it pricier in other currencies. But near-panicked flights to safety are supporting both assets in the current environment.

The other precious metals were lower, with silver dropping 0.7% while platinum and palladium lost 2.7% and 4.8%, respectively.

At the Comex close: April gold gained $20.40 to $1,931.30; May silver slid 16 cents to $21.88; April platinum dropped $27 to $970.30; June palladium declined $72.90 to $1,444.80 an ounce.

  

Metal Ask      Change
Gold $2,235.81           Price Change Down Arrow $-2.68
Silver $25.08           Price Change Down Arrow $-0.06
Platinum $918.61           Price Change Down Arrow $-0.56
Palladium $1,051.50           Price Change Up Arrow $0.26
In US Dollars