Gold keeps sliding on stronger dollar amid jitters over banking risks

Bengaluru — Gold prices edged down for a second consecutive session on Monday as the US dollar firmed, while authorities attempted to assuage investor fears of a widespread crisis in the global banking sector.

Spot gold was down 0.1% at $1,975.59 per ounce by 5.50am. US gold futures fell 0.3% to $1,977.90.

The dollar index was largely steady and made bullion less affordable for overseas buyers.

“Markets continue to adopt a cautious stance … On net, the mix of growth worries [and] lingering concerns of banking stresses could benefit safe-haven proxies such as USD, JPY and gold in the interim,” said OCBC FX strategist Christopher Wong.

Calming some nerves were reports that First Citizens Bancshares was in advanced talks to acquire Silicon Valley Bank.

Gold had risen above the $2,000 mark after the sudden collapse of two US lenders, but has since pulled back from those levels after rescue measures by authorities, which included UBS’ emergency takeover of ailing Credit Suisse.

However, some investors still worried that regulators have yet to contain the worst shock to the banking sector since the 2008 global financial crisis after shares of Deutsche Bank plunged on Friday.

Recent stress in the banking sector and the possibility of a follow-on credit crunch brings the US closer to recession, Minneapolis US Federal Reserve president Neel Kashkari said on Sunday.

The threat of a recession has resulted in investors increasing their allocation to the precious metal in droves, ANZ said in a note.

Markets are pricing in a nearly 90% chance of the Fed standing pat on interest rates at its May meeting, according to the CME FedWatch tool.

While gold is considered a hedge against inflation and economic uncertainties, higher interest rates tend to discourage investment in non-yielding bullion.

Spot silver fell 0.6% to $23.08 per ounce, platinum was 0.2% lower at $974.60 and palladium slipped 0.7% to $1,405.48.

Reuters