Gold prices finished at a five-week high as the U.S. dollar weakened and Treasury yields declined after the Federal Reserve and other U.S. authorities attempted to prevent a banking crisis from spreading in the aftermath of SVB collapse.
Price action
- Gold prices for April delivery GC00, +2.48% GCJ23, +2.48% gained $ 49.30, or 2.6%, to settle at $ 1,916.50 per ounce on Comex. That was the highest close for a most-active contract since Feb. 2, 2023, when it settled at $ 1930.80, according to Dow Jones Market Data.
- Silver prices for May delivery SI00, +6.38% SIK23, +6.38% rose by $ 1.4, or 6.9%, to end at $ 21.92 per ounce.
- June palladium PAM23, +7.54% gained $ 114.40, or 8.4%, to finish at $ 1,476.70 per ounce, while platinum for April PLJ23, +4.76% gained $ 42.70, or 4.4%, to settle at $ 1004.90 per ounce.
- Copper for May HGK23, +0.47% delivery slightly rose by 2 cents, or 0.6%, to end at $ 4.05 per pound.
Market drivers
Gold extended its safe-haven appeal on Monday as investors were piling into the yellow metal despite President Joe Biden’s assurance that the banking system is still “safe” in the wake of the failures of Silicon Valley Bank and Signature Bank.
“Gold has been one of the few beneficiaries from the collapses of first Silvergate and then Silicon Valley Bank with the precious metal’s safe haven appeal seeing its price surge to close to $ 1,900 an ounce [on Monday morning],” said Rupert Rowling, a market analyst at Kinesis Money.
On Sunday evening, U.S. authorities stepped in to announce they would backstop deposits at Silicon Valley Bank and Signature Bank, which was seized over the weekend after it suffered its own wave of deposit flight. The Fed also announced a new program for supplying liquidity to banks.
See: Biden says Americans can have confidence that banking system is safe
Biden said on Monday that country should be confident in U.S. banks after regulators took action over the weekend.
“Look, the bottom line is this: Americans can rest assured that our banking system is safe. Your deposits are safe,” Biden said in a brief speech at the White House.
See: Treasury yields see biggest three-day skid since wake of Black Monday in 1987
Prices of precious metals were also taking advantage of falling Treasury yields. The yield on the policy-sensitive 2-year Treasury note TMUBMUSD02Y, 4.067% fell below 4% on Monday morning and headed for its biggest three-day decline since the Oct. 22, 1987 stock-market crash, also known as “Black Monday” in which the S&P 500 SPX, +0.31% plunged 20% for its worst one-day drop.
The ICE U.S. Dollar Index DXY, -0.86%, a gauge of the greenback’s strength against a basket of rivals, was off 0.9% to 103.62.