Gold prices drop in early trade

20 Mar 2023 , 08:39 AM

As risk sentiment increased following the Swiss firm UBS’s agreement to acquire rival Credit Suisse as part of a bailout plan to control a banking crisis and stabilize global financial markets, gold prices fell 1% on Monday, losing some of their safe-haven appeals.

Spot gold was down 1% at $1,969.14 per ounce after earlier in the day reaching its highest level since April 2022. Futures for U.S. gold increased 0.2% to $1,977.60.

On Sunday, UBS and Credit Suisse, a 167-year-old company, reached an agreement for UBS to purchase Credit Suisse for $3.23 billion and to take on up to $5.4 billion in losses. The deal is supported by a sizable Swiss guarantee and is anticipated to finish by the end of 2023.

Leading central banks took action on Sunday to increase the flow of money throughout the world in response to the threat of a swift decline in trust in the soundness of the financial system.

In response to a weekend rescue package for Credit Suisse, Asian stocks stabilized and U.S. futures climbed on Monday, albeit trade remained edgy and turbulent due to concerns about contagion spreading to financial shares.

The dollar increased by 0.1%, which decreased the appeal of bullion for buyers using other currencies.

A rise in bullion prices brought on by the collapse of the world’s banks compelled Indian dealers to give further discounts on physical gold to entice retail buyers and caused a decline in China premiums last week, compelling some to sell.

Silver prices on the spot market declined by 1.4% to $22.27 per ounce, platinum dropped by 0.4% to $971.92, and palladium dropped by 0.1% to $1,418.26.

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