Gold surpasses Dollar as premier safe haven

NEW YORK (March 24) Gold prices remains close to key levels, signaling a fourth week of gains, with the dollar tumbling to a seven-week low against a basket of currencies.

The Federal Reserve’s less hawkish stance coupled with the recent banking crisis that highlighted the impact of high borrowing costs, has increased investor confidence in the yellow metal.

Spot gold was unchanged at $1,993.60 an ounce, while gold futures stabilised at $1,995.65 an ounce.

The recent collapse of several US regional banks saw investors flock towards gold over the past three weeks, as the banking sector instability and risk of contagion shook markets. Despite regulatory intervention to restore faith in the banking system, markets remain on edge over any potential ructions.

The Federal Reserve’s softening of its hawkish stance also brewed concerns of a banking collapse, despite Treasury Secretary Janet Yellen’s reassurance of stability in the sector. The market is now pricing in the possibility that the Fed will raise rates only once this year after hiking rates by a cumulative 475 basis points in the past 12 months.

The pause in the Fed’s hiking cycle bodes well for gold, which was pressured by the strength of the dollar and rising yields in 2022. The yellow metal has also benefited from investor interest amid concerns of an economic slowdown this year.

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