Gold prices rise in early trade

28 Mar 2023 , 08:41 AM

Despite an increase in risk appetite following steps by regulators to quell concerns over the global banking system, gold prices moved up on Tuesday as the U.S. dollar weakened. 

Spot gold was up 0.1% at $1,958.85 per ounce. Futures for U.S. gold increased 0.3% to $1,959.30.

The dollar index decreased by 0.1%, lowering the price of bullion for customers using other currencies.

Following First Citizens BancShares’ announcement that it would assume the deposits and debts of the defunct Silicon Valley Bank, investors reduced their safe-haven trading in favour of riskier assets, which caused gold prices to decline by more than 1% on Monday.

Andrew Bailey, the governor of the Bank of England, gave a signal on Monday that those who set interest rates would prioritize combating inflation and would not be overly influenced by concerns about the stability of the world banking system.

Federal Reserve Governor Philip Jefferson stated on Monday that the U.S. Federal Reserve is ‘still learning’ how big of an impact its interest rate rises have had on the economy and inflation.

According to the CME FedWatch tool, markets are pricing in a nearly 60% possibility of the Fed keeping interest rates unchanged at its meeting in May.

Non-yielding bullion investment is typically discouraged by higher interest rates.

Platinum increased 0.4% to $975.13, palladium increased 0.5% to $1,414.99, while spot silver moved up 0.1% to $23.11 per ounce.

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