Gold prices settle at highest since April as banking jitters persist

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Gold futures settled Monday at their highest in about 11 months, after briefly topping the $2,000-an-ounce mark for the first time in over year, as the takeover of Credit Suisse by UBS stoked fears about more banking-sector fallout.

Price action
  • Gold for April delivery
    GC00,
    +0.74%

    GCJ23,
    +0.74%

    gained $9.30, or 0.5%, to settle at $1,982.80 per ounce on Comex, the highest settlement for a most-active contract since April 18, according to Dow Jones Market Data. Prices touched an intraday high of $2,014.90, the highest since March 10.

  • May silver
    SI00,
    +0.97%

    SIK23,
    +0.97%

    climbed by 18 cents, or 0.8%, to settle at $22.646 per ounce, the highest in roughly six weeks.

  • July platinum
    PLN23,
    +1.70%

    rose by $16.50, or 1.7%, to $997.40 per ounce while June palladium
    PAM23,
    +1.80%

    gained $14.50, or nearly 1.1%, to $1,400.60 per ounce.

  • Copper for May delivery
    HGK23,
    +1.67%

    gained 6 cents, or 1.5%, to $3.9515 per pound.

Market drivers

Last week’s gold rally was about the “busting of banks” in the United States and Europe, said Chintan Karnani, director of research at Insignia Consultants. “There are fears that banks crumbling are just the beginning.”

There could be more large and tiny corporations which need to be rescued, so there is “huge safe haven demand in gold,” he told MarketWatch.

“Long-term damage has been done to the credibility of U.S. banks,” said Karnani. “Significant price corrections (if any) in gold price will be for a very short period.”

See: Here’s why UBS’s deal to buy Credit Suisse matters to U.S. investors

Karnani said investors will need to keep a close watch on gold exchange-traded fund demand numbers and gold investment demand numbers as “they will dictate prices, as opposed to gold physical demand, which is certain to sink.” 

The yellow metal has also benefited from weakness in the U.S. dollar.

The ICE U.S. Dollar Index
DXY,
-0.41%
,
a gauge of the buck’s strength against a basket of rivals, fell by 0.3% to 103.389, according to FactSet data. The yield on the 10-year Treasury note
TMUBMUSD10Y,
3.480%

traded as low as 3.2968%, though was last up 9.8 basis points to 3.4856%.

“Gold will remain the asset of choice until investors have more confidence that no other financial institutions are at risk,” said Rupert Rowling, a market analyst at Kinesis Money.



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