Gold futures closed at a six-week high on Wednesday (March 15), as investors turned to gold as a safe-haven asset amid growing concerns about the banking crisis in the US and Europe.
Gold futures rose by $20.40, or 1.07%, to close at $1,931.30 per ounce. This was the highest closing level since February 1, 2023.
Silver futures, on the other hand, dropped by 15.80 cents, or 0.72%, to $21.882 per ounce, while platinum futures fell by $27, or 2.71%, to $970.30 per ounce. Palladium futures also slipped by $72.90, or 4.8%, to settle at $1,444.80 an ounce.
Investors are worried about the financial condition of Credit Suisse, Switzerland’s second-largest bank, after its largest shareholder, the Saudi National Bank (SNB), announced that it was unable to increase its financial support to Credit Suisse due to banking regulations. SNB’s increased support would allow it to hold a stake in Credit Suisse Swiss more than 10%, which would violate banking regulations. This situation adds to concerns over the US government’s shutdown of Silicon Valley Bank and Signature Bank.
In addition to the banking crisis, the gold market was driven by expectations that the Federal Reserve (Fed) would not raise interest rates at its upcoming meeting this month and may even reduce total interest rates by 1% by the end of the year. Investors have become increasingly concerned after discovering that the banking crisis has spread from the United States to Europe.
The CME Group’s FedWatch Tool indicates that investors currently believe there is a 52.0% chance that the Fed will hold interest rates at 4.50-4.75% at its March 21-22 meeting, and a 48.0% chance that the Fed will raise rates by 0.25%. Furthermore, investors predict that the Fed’s target interest rate will drop to a range of 3.50-3.75% in December from the current range of 4.50-4.75%, suggesting the Fed could cut rates by as much as 1.00% this year.
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Thursday, March 16, 2023