Monday’s Quick Daily Outlook: Gold Prices on the Rise

While US officials announced steps to stabilize the banking system and reduce the effect from the failure of Silicon Valley Bank, GOLD prices rose by 0.5% at the start of the week after rising by 2% on Friday (SVB). GOLD has a current price of $1,878, with a range of $1,867.03–$1,894.68.

On Monday, the US Treasury and the Federal Reserve released a joint statement detailing their plans to stabilize the banking system and guarantee SVB depositors’ access to their money. Customers of the defunct Silicon Valley Bank will have full access to their funds beginning on Monday, as promised by the Biden administration.

Investors feared a financial market collapse if the Federal Reserve raised interest rates by a whopping 50 basis points this month. Fed fund futures soared, indicating a 17% possibility of a half-point raise, down from about 70% before the SVB news emerged, and the US dollar fell. GOLD benefited from a decrease in interest rates as yields on two-year Treasuries fell to 4.445% from a high of 5.08% last week.

Traders have their eyes on Tuesday’s release of US consumer price index data. Even while the financial sector is still under pressure, if the evidence is strong, the Fed may take more decisive action.

In sum, the fall of SVB and the possibility of a weaker US dollar have both had an impact on the price of gold. Financial market participants are also monitoring economic indicators in an effort to predict the Fed’s next move. Investors in gold and other commodities should exercise caution and a long-term perspective.