Early on Friday in Asian trading. Gold price remained unchanged and on track to enjoy their best weekin two months as demand for safe haven assets increased because of worries about a potential banking crisis.
Gold price also benefited from skepticism regarding the Federal Reserve’s ability to continue raising interest rates in light of the intensifying strain on the economy.
However, a surge into safe havens gave gold the biggest boost as concerns over the spread of contagion in the larger economy. And worries about an impending recession increased in response to the failure of 2 regional U.S. banks.
Gold futures increased 0.94% to $1,940.65 per ounce by 17:00 GMT. While spot gold increased to $1,936.88 per ounce (17:00 GMT). Both instruments were up almost 4% for the week and were traded near to thier greatest level since early January.
Why Is Gold Price Rising Despite Unfavourable Economic Factors?
This week, markets flooded into gold as a result of the failure of Silicon Valley Banks & other smaller regional competitors. Even after government intervention & the rescue of other struggling lenders. Markets were still on edge due to the possibility of a wider banking catastrophe.
In addition, traders dramatically reduced their expectations of more Fed interest rate increases before a meeting the following week. The probability that the Fed would raise interest rate by 25 (bps) has dropped from earlier estimates of a 50 bps increase to around 90% in the markets.
This idea made the dollar weaker, which benefited the metal markets as well. Nevertheless, the dollar recovered most of its losses this week thanks to some safe-haven demand and stronger-than-expected February inflation statistics from the United States.
The Fed is under increased pressure to raise interest rates due to relatively high inflation. The bank conference coming weeks. Which is anticipat to deliver additional clues on monetary policy, is currently the only thing on everyone’s mind.
On Friday, other precious metals strengthened and looked poised to conclude the week higher. The weekly gains for silver & platinum futures were 7.0% & 2%, respectively, up 0.6% and 0.2%.
Copper prices among industrial metals stabilised on Friday after suffering substantial losses this week due to worries that a future recession could drastically cut demand.