AGE Daily Gold Update

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

3/21/2023: Gold falls on profit-taking

Source: Bill Musgrave, American Gold Exchange

Austin — Gold fell 2.1% but held above $1,941 as rising yields and easing bank fears caused traders to take profits ahead of tomorrow's rate decision by the Fed. The metal had rallied more than 8% over the previous eight sessions and briefly surpassed $2,000 in intraday trading yesterday.

Hoping to ease anxiety over recent bank failures, Treasury Secretary Yellen said today she is ready to protect smaller financial institutions that get into trouble because of runs on deposits. In addition, the Treasury is considering unlimited deposit guarantees beyond the $250,000 insured by the FDIC.

Separately, JPMorgan has reportedly offered further assistance to First Republic, with CEO Jamie Dimond working to raise yet more capital after engineering a $30 billion deposit from 11 major banks last week. Shares of the beleaguered bank rose 40% today after falling to all-time low yesterday.

Following the rescue of Credit Suisse by USB and the Swiss National Bank, the news helped to quell fears of contagion triggered by the abrupt failures of SVB, Signature Bank, and Silvergate over the past two weeks.

Benchmark 10-year Treasury yields rebounded to just under 3.6% as risk-off sentiment began to ebb. Higher yields weigh on gold by increasing the opportunity cost for holding it instead of bonds as a safe-haven asset.

The dollar was near-flat as rising risk appetite was offset by lingering worries that the Fed could push the economy into recession by continuing to raise interest rates. The odds of a quarter point hike tomorrow have risen to 85%, according to CME FedWatch, up from 74% yesterday.

Even if the Fed backs off the most aggressive rate-hike cycle in a generation, the banking crisis increases the likelihood that the US economy will have a hard landing this year. Other banks are expected to tighten credit, hampering growth. Goldman Sachs estimates the crisis will shave GDP by half a point, potentially tilting 2023 growth into the negative.

The other precious metals were also lower, with silver sliding 1% while platinum and palladium lost 2% and 1.3%, respectively.

At the Comex close: April gold lost $41.70 to $1,941.10; May silver slid 22 cents to $22.43; April platinum retreated by $20.10 to $976.70; and June palladium shed $17.50 to $1,383.10 an ounce.