Posted by Parani Krishnan
Investing.com – Gold reached 11-month highs, breaking through the $1,900 median pricing to head towards gold bulls’ long-term target of $2,000, as the US banking crisis pushed more investors toward safe havens on Friday.
“The return of banking anxiety is pushing gold prices sharply higher,” said Ed Moya, an analyst at Onda online trading platform. “Many gold investors look at short-term macro risks and it appears that a wide range of expectations should be mostly positive for the bullion.”
It settled on the Comex Stock Exchange in New York at $ 1,973.50 an ounce, an increase of $ 50.50, or 2.6%. The session high was $1,980.50, which is the highest since $1,985.10 recorded on April 19, 2022. Over the course of the week, gold in April rose by a whopping $106.30, or 5.7%.
Gold, which some traders followed closely, was at $1,973.92 by 13:55 ET (17:55 GMT), up $54.37, or 2.8%. The highest price of gold in the session was $1,975.24, which is also the highest level in 11 months.
Chart expert Sunil Kumar Dixit said gold’s charts indicated that a test of $2,000 was possible, as long as the current momentum continues.
“Today’s crazy rally in gold shows that more people are turning to gold as a safe haven and store of value as the bank credit crisis continues to grow and spread,” said Dixit, Chief Technical Strategist at SKCharting. “From this point on, as long as prices maintain above $1,960, we could see continued momentum towards the psychological $2,000 barrier.”
Investing.com data shows the last time gold peaked above $2,000 was in March 2022 when it reached $2,070.29, which effectively matches the record high of $2,072.90 in August 2020.
Gold prices have penetrated since the outbreak of the banking crisis in the United States a week ago with the takeover of two medium-sized lenders by the Federal Deposit Insurance Corporation – Silicon Valley and Signature Bank – as depositors withdrew billions of dollars from them after fearing for their solvency. Silicon Valley filed for bankruptcy protection within the past 24 hours. A third bank, the First Republic, is also in trouble despite receiving a $30 billion cash infusion from a consortium of banks.
In other news, the banking crisis has spread to Europe, as Credit Suisse Group, one of the leading names in global investment banking, has been forced to seek help from the Swiss Central Bank.
Continuous interest rate increases by the Federal Reserve have also led to fears that the US economy could end up in a deep recession.
Whatever way the central bank plays now could be a boon for gold, said Moya of Onda.
“If the Fed ends up raising interest rates, that should be bullish for gold as it puts a short-term cap on inflation. If inflation proves more steady and the Fed is forced to resume tightening, that will deal a huge blow to the economy and unleash many inflows on Gold as a safe haven.
He said gold could hover around $1,950 before the Fed’s next interest rate decision on March 22, adding that Wall Street might have a better handle after that on how bad of a recession the US could face. “Safe-haven flows into gold should be steady as the economy enters a recession,” he added.