Gold falls as banking concerns ease

Gold falls as banking concerns ease

Gold falls as global banking concerns ease, dulling the precious metal’s appeal as a hedge against uncertainty.

The yellow metal also retreated after bumping against resistance near the $2,000-an-ounce level. Some stability in the dollar also pressured gold, making it less attractive to holders of other currencies.

June gold futures gained 1% Tuesday to settle at $1,990.40 an ounce on Comex, though the front-month contract dropped 0.6% in the first two days of the week. Bullion is up 8.4% this month after decreasing 5.6% in February, its worst performance since June 2021. The metal fell $2.40 in 2022. The June contract is currently down $9.3 (-0.47%) an ounce to $1981.10 and the DG spot price is $1965.50.

U.S. consumer confidence unexpectedly increased in March, buoying sentiment that the Federal Reserve could raise interest rates again at its May policy meeting. Many investors were betting on policymakers holding rates steady because of the banking crisis. 

The consumer confidence index increased to 104.2 from a 103.4 reading in February, according to data published by the Conference Board on Tuesday. Consensus estimates published by Bloomberg forecast it would fall to 101. 

Key indicators ahead of the Fed decision include upcoming economic reports on inflation and the labor market. The Fed’s favorite inflation measure, the personal consumption expenditures price index, is scheduled for release on Friday, with February data. Meanwhile, the U.S. monthly jobs report for March comes out next week. 

The Fed raised rates by another 25 basis points last week to combat soaring inflation. The Fed has raised rates by 25 basis points twice this year following rate hikes of 50 basis points in December and 75 basis points each in June, July, September and November. 

Any pause or halt in rate hikes would be seen as supportive for gold since higher interest rates are typically bearish for gold.

About 58.2% of investors tracked by the CME FedWatch Tool are betting that the Fed will leave interest rates unchanged at the Fed’s next policy meeting in May, while 41.8% anticipate a 25 basis point increase. 

Silver May futures gained 1.2% Tuesday to settle at $23.42 an ounce on Comex, and the metal is up 0.4% so far this week. Silver has increased 11% in March after retreating 12% in February. It advanced 3% in 2022. The May contract is down $0.080 (-0.34%) an ounce to $23.340 and the DG spot price is $23.28.

Spot palladium rallied 0.4% Tuesday to $1,443.50 an ounce, though it slid 0.7% in the first two days of the week. Palladium has advanced 0.2% so far this month after plummeting 14% in February. It lost 5.7% in 2022. Currently, the DG spot price is up $13.30 an ounce to $1453.00.

Spot platinum fell 0.4% Tuesday to $973.50 and is down 1.4% so far this week. Platinum has gained 1% this month after retreating 5.9% in February. It surged 10% in 2022. The current DG spot price is down $6.40 an ounce to $965.80.

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