Gold prices remain stable in early trade

14 Mar 2023 , 08:47 AM

Tuesday saw gold prices remain above the crucial $1,900 per ounce mark as demand for non-yielding bullion increased on predictions of less aggressive Federal Reserve rate increases in the wake of the failure of two significant U.S. regional banks.

Spot gold was unchanged at $1,913.54 per ounce. At $1,916.20, U.S. gold futures were likewise inactive.

Despite efforts by U.S. authorities to contain the repercussions from the now-shuttered Silicon Valley Bank and regain investor trust in the financial system, gold prices increased more than 2% on Monday to achieve its highest level since February 3 at $1,914.58. On Sunday, regulators closed the New York-based Signature Bank.

On Monday, HSBC purchased Silicon Valley Bank’s UK division for a symbolic one pound, saving a crucial British lender for technology start-ups.

With a 31.4% possibility of a pause in rate hikes, markets are currently mainly pricing in a 25-basis-point rate increase at the Fed policy meeting next week.

With prospects of reduced interest rates, which lower the opportunity cost of storing non-yielding metal, gold is seen as a hedge against economic uncertainty.

Indications regarding the Fed’s rate-hike plan will be keenly scrutinized in the U.S. consumer price index (CPI) report for February, which is scheduled at 1230 GMT.

The dollar index increased by 0.2%, increasing the price of bullion for customers using other currencies.

The largest gold-backed exchange-traded fund in the world, SPDR Gold Trust, reported that its holdings increased 1.31% to 913.27 tonnes on Monday from 901.42 tonnes on Friday.

Spot silver increased by 0.1 percent to $21.83 per ounce, platinum decreased by 0.1 percent to $995.21, and palladium was constant at $1,473.33.

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