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ShreeMetalPrices: Gold prices rises as recession fear fuels safe-heaven demand


Gold prices surged to crucial levels on Wednesday, boosted by safe-haven demand as a run of disappointing the United States (US) corporate and the earnings & financial data fuelled fears of a recession this year.

After First Republic Bank reported a far larger-than-expected loss in its deposits. Which soured sentiment towards regional banks, resurgent worries of a banking collapse also bolstered demand for safe haven assets.

The dollar and the gold both increased on Tuesday, showing that. Traders were mostly looking for safe haven assets amid rising economic unpredictability. Sharp losses in risk-sensitive markets also occurred along with this, with Wall Street indices dropping 1 percent to 2 percent.

Softer Data on United States consumers’ confidence also indicated that spending has slowed this year, which has a negative impact on economic expansion.

As of 15:10 IST , spot gold was up to 2,000.80 dollar an ounce. While futures for gold were up 0.25 percent to 2,009.60 dollar. On Tuesday, both commodities saw a significant increase and were poised for the 3rd straight day of increases.

US Recession Forecast

“Gold is attempting to regain its rightful position above the 2,000 dollar per ounce level… According to a recent report by senior market analyst at Oanda, Edward Moya, “Gold’s optimistic prognosis is predicated on the increased amount of risk that is on the table: profit risk, slower lending, concerns about financial stability, & sticky inflation.

In recent weeks, gold had suffered from monetary policy uncertainty and a strengthening dollar as market disagreed on when the Fed would stop raising interest rates. The bank meets the following week, it is widely anticipate that it will increase interest rates by 25 bps. The bank may also give some hints as to how much higher the rate of interest will go.

But given that rising interest rates are likely to have a negative impact on economic development, markets are wagering that. The Fed would tone down its hawkish attitude this year to limit further harm.

In spite of some Fed officials asking for additional rate hikes in recent weeks, the bank has not yet made such a statement.

On Wednesday, other valuable metals also rose as a result of a rise in the need for safe haven assets. Silver prices gained 0.82 percent while platinum futures increased by 1.77 percent.

Copper prices among industrial metals stabilised after recent declines as the likelihood of weakening economic growth suggested a weakened need for the red metal.

Although copper futures were trading down over 3 percent for the week. After losing by a comparable amount the previous week, they did rise to 3.882 dollar.