Gold price nears $2,000 per ounce amid banking crisis
The last time spot gold peaked at above $2,000 was in March 2022 when it reached a level $2,070.29.
Gold prices reached all-time highs in 11 months on Friday, nearing the $2000 mark as the banking crisis is driving more money out of banks and investors to search for safer havens.
"The return of bank angst is sending gold prices sharply higher," Ed Moya, an analyst at online trading platform OANDA, told Sputnik. "Many gold investors are looking at the short-term macro risks and it seems that a wide range of expectations should mostly be positive for bullion."
This also comes in light of slumping oil prices as both WTI and Brent crude benchmarks recorded double-digit losses for the week in today's late afternoon trading hours.
On the day, benchmark gold futures for the month of April on New York’s Comex settled at $1,973.50 an ounce, up $50.50 which equals a gain of 2.6%.
As for the week, April gold was up by $106.30, or 5.7%. Friday's session high was $1,980.50, a never-seen-before high in Comex gold since its $1,985.10 peak recorded on April 19, 2022.
The spot price of bullion has risen about 5.8% this week, with a record of $1,973.92 by 1:55 p.m. ET (17:55 GMT), up $54.37 or 2.8% on the day. The session high for spot gold was $1,975.24, also marking an 11-month peak.
Spot gold price charts show that the $2,000 level may be reached as long as the momentum remains, chartist Sunil Kumar Dixit said.
"Today's insane rally in gold shows that more people are turning to gold as a safe haven and store for value as the banking credit crisis continues to grow and spread," Dixit, chief technical strategist at SKCharting, told Sputnik. "From this point on, so long as prices sustain above $1,960, we can witness a continuation of the momentum reaching for the psychological barrier of $2,000."
The last time spot gold peaked above $2,000 was in March 2022 when it reached a level of $2,070.29.
The crisis began with two mid-size lenders - SVB and Signature Bank - being taken over by Californian regulators. SVB is considered the second largest bank failure in history, whereas Signature Bank is viewed as the third.
Another bank, First Republic, also found itself in hot water despite it received a $30 billion cash infusion from a consortium of banks.
The crisis has spread to other banks in Europe, including Credit Suisse, which announced yesterday it was taking a $53.7 billion loan from the Swiss central bank in a bid to "pre-emptively strengthen its liquidity" a day after stock prices fell by a huge margin as it struggles to nip in the bud a confidence crisis.
Rate hikes by the Fed have fueled fears among investors that the US may end up in an irreversible cycle of economic downturn.
"If the Fed is done with rate hikes, that should be bullish for gold as it puts a short-term cap on the dollar," Senior market analyst Ed Moya said. "If inflation proves to be stickier and the Fed has to resume tightening, that would deliver a major blow to the economy and trigger many safe-haven flows for gold."
"Safe-haven flows into gold should be steady as the economy enters a recession," he added.