Gold Hits 12-Month High Early Monday

Gold Hits 12-Month High Early Monday

Gold hits 12-month high early Monday, topping $2,000 an ounce before profit taking and a stronger stock market took a bit of wind out of its sails, slipping over $20 an ounce. The activity is being driven by the global banking crisis while investors eye the Federal Reserve’s monetary policy decision Wednesday.

Swiss lender UBS agreed Sunday to buy Credit Suisse to rescue the bank and stabilize global markets which have been hammered for over a week by a series of bank collapses. The crisis has boosted gold last week as a haven asset.

The Fed and other global central banks also jointly announced on Sunday that they were working together to make dollar swap lines more readily available to keep the U.S. currency flowing through the world’s banking system. The Fed acted along with the European Central Bank, the Bank of England, the Bank of Canada, the Bank of Japan and Swiss National Bank. The move alongside the Credit Suisse acquisition bolstered market sentiment early Monday. 

The central bank actions come days before Fed policymakers are widely expected to announce their second 25-basis-point rate hike this year as part of an effort to combat high inflation. The Fed raised rates by 25 basis points Feb. 1 following rate hikes of 50 basis points in December and 75 basis points each in June, July, September and November. Interest rate increases are typically bearish for gold because they make the yellow metal less attractive as an alternate investment. 

About 73.1% of investors tracked by the CME FedWatch Tool are betting that the Fed will boost rates by 25 basis points Wednesday. The remaining 26.9% of investors are anticipating rates to remain unchanged. A week ago, 65% of investors were anticipating a 25 basis-point hike, with 35% predicting rates would remain unchanged. 

Front-month gold futures climbed  6.6% last week to settle at $1,990.20 an ounce on Comex  as the most active contract rolled to June from April. June futures gained 2.6% Friday. Bullion decreased 5.6% last month, its worst performance since June 2021. It increased 6.5% in January and gained 3.8% in December. The metal fell $2.40 in 2022. The June contract is up $13.1 (+0.66%) an ounce to $2003.30 and the DG spot price is $1976.10.

Silver May futures surged 9.5% last week to settle at $22.46 an ounce on Comex after increasing 3.6% Friday. Silver retreated 12% last month after falling 0.8% in January and rising 10% in December. It advanced 3% in 2022. The May contract is up $0.163 (+0.73%) an ounce to $22.625 and the DG spot price is $22.51.

Spot palladium jumped 3% last week to $1,429.50 an ounce, though it dropped 1.5% Friday. Palladium plummeted 14% in February after dropping 7.4% in January and retreating 4% in December. It lost 5.7% in 2022. The current DG price is up $8.90 an ounce to $1425.00.

Spot platinum increased 1.6% last week to $981.80 an ounce after edging up 60 cents Friday.  Platinum retreated 5.9% in February after falling 4.3% in January and gaining 3.4% in December. It surged 10% in 2022. Currently, the DG spot price is up $11.40 an ounce to $991.00.

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