Global Gold Prices Soar In Impact Of Investors Buying Safe Assets Amid A Banking Crisis

Gold Illustration (Photo: Doc. Antara)

JAKARTA - Global gold prices rose sharply to their highest level in the last 11 months at the close of trading Friday, March 17 local time.

The increase after weakening in the previous session was hit by the banking crisis. This sparked purchases of safe-haven assets, also driven by a lower US dollar.

The most active gold contract for April delivery on the Comex division of the New York Exchange jumped US$50.50, or 2.63 percent, to close at US$1,973.50 per ounce, after trading at a session high of US$1,980.60. US and the lowest at 1,922.30 US dollars.

Gold futures fell US$8.30, or 0.43 percent, to US$1,923.00 on Thursday (16/3/2023), after climbing US$20.40, or 1.07 percent, to US$1,931.30 on Wednesday ( 15/3/2023), and slipped US$5.60, or 0.29 percent, to US$1,910.90 on Tuesday (14/3/2023).

For the week, April gold soared $106.30, or 5.7 percent.

The global banking crisis continues to weigh on investor sentiment, prompting investors to switch to the safe-haven asset gold. Gold also benefited from market speculation that the Federal Reserve may end its rate hike cycle after another 25 basis point rate hike at its meeting next week.

Speculation of a slowdown in the pace of Fed rate hikes dampened the US dollar index on Friday (17/3/2023). The dollar index, which measures the greenback against six other major currencies, fell 0.67 percent to 103.7153 providing support to gold.

"The return of anxiety about banks is sending gold prices sharply higher," said Ed Moya, an analyst at online trading platform OANDA. "Many gold investors are looking at near-term macro risks and it seems the expectations will be mostly positive for gold."

Economic data released on Friday (17/3/2023) is increasingly supporting gold. The Federal Reserve reported that US industrial production remained unchanged in February, falling short of market expectations for a 0.2 percent increase.

The preliminary reading of the University of Michigan's consumer sentiment index fell to 63.4 in March from 67 in February, the first time in four months. Economists expect the index to remain unchanged from February.

"Gold's insane rally today shows that more people are turning to gold as a safe haven and store of value as the banking crisis continues to grow and spread," said Dixit, chief technical strategist at SKCharting.

"From now on, as long as the gold price holds above $1,960, we could see a continuation of the momentum towards the psychological barrier of $2,000," he explained.

Another precious metal, silver for delivery in May, was up 77 cents, or 3.55 percent, to close at 22.462 dollars per ounce. Platinum for delivery in April added $1.50, or 0.15 percent, to settle at $978.60 an ounce.