Gold prices held above the key $1,900 per ounce level on Tuesday as expectations of less-aggressive Federal Reserve rate hikes after the collapse of two big U.S. regional banks lifted non-yielding bullion’s appeal.
FUNDAMENTALS
Spot gold was flat at $1,913.54 per ounce, as of 0053 GMT. U.S. gold futures were also listless at $1,916.20.
Gold prices jumped more than 2% on Monday to hit their highest since Feb. 3 at $1,914.58 despite efforts by U.S. officials to limit the fallout from the now-shuttered Silicon Valley Bank and restore investor confidence in the banking system. Regulators had shuttered New York-based Signature Bank on Sunday.
HSBC bought the UK arm of Silicon Valley Bank for a symbolic one pound on Monday, rescuing a key lender for technology start-ups in Britain.
Markets are now largely pricing in a 25-basis-point rate hike at next week’s Fed policy meeting, with a 31.4% chance of a pause in hikes.
Gold is considered a hedge against economic uncertainties, and tends to gain on expectations of lower interest rates, which reduce the opportunity cost of holding non-yielding bullion.
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