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Business News/ News / World/  Gold set for best week since mid-March on fears over US banks
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Gold set for best week since mid-March on fears over US banks

Gold set for biggest weekly gain since March on US banking sector worries.

Gold set for biggest weekly gain since March on Fears Over US BanksPremium
Gold set for biggest weekly gain since March on Fears Over US Banks

Gold headed for its biggest weekly gain since mid-March as renewed worries about the US banking sector fueled bets the Federal Reserve may have to cut rates sooner-than-anticipated.

Bullion was steady on Friday, and is up around 3% this week. It’s surged since early March on falling Treasury yields, nervousness over US banks, and the debt ceiling standoff. Gold hit a one-year peak on Thursday and is within reach of the record high set in 2020. 

The main focus at the moment is the deepening rout in US regional banks and what that means for interest rates. There are expectations the Fed may have to start cutting borrowing costs by July in response to the tightening credit conditions. Lower rates are supportive for the precious metal, which doesn’t offer any interest.

The debt-ceiling standoff, which could have disastrous consequences if it isn’t resolved, drove up rates on short-term Treasury bills, pushing them over 10-year yields by the most in at least three decades. The steep inversion of the yield curve is exacerbating recession concerns and boosting the appeal of haven assets.

Spot gold was steady at $2,049.68 an ounce as of 9:07 a.m. in Singapore after rising 3.4% over the previous three sessions. The Bloomberg Dollar Spot Index fell 0.1% and is down 0.5% this week. Silver and platinum slipped, while palladium edged higher.

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Published: 05 May 2023, 07:28 AM IST
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