The price of gold rose significantly on Monday, exceeding the $2,000 mark (for the first time since April 18, 2022), and reaching the highest level since March 10, 2022. Demand for precious metals, which is considered a safe haven asset, has intensified amid the escalation of the banking crisis in the United States and Europe.
Experts note that now the attention of market participants is focused on the reaction of the banking sector to the financial assistance of Credit Suisse, as well as at the Fed meeting on Wednesday, the results of which look very uncertain, given the rapidly changing probability of keeping the rate unchanged or increasing it by 0.25%. Considered a hedge against economic uncertainties, zero-yield gold becomes a more attractive bet in a low-interest rate environment.
Overall, after the collapse of Silicon Valley Bank, the value of gold jumped by more than 10% amid increased demand for safe haven assets.
Meanwhile, a certain pressure on gold is exerted by the positive dynamics of the US currency. The US Dollar Currency Index (DXY), which tracks the dynamics of the dollar against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona) rose by 0.10% to 103.80.
"Whether gold will be able to maintain its positions will depend on the dollar. We consider the US dollar to be a more important safe haven asset than gold. This means that if the risk events are significant enough, we can see how the markets will switch from gold to the US dollar,” analysts at Commonwealth Bank of Australia said.