Gold prices, a representative safe asset, exceeded $2,000 per ounce on the 20th (local time), the highest in a year.
According to Bloomberg and MarketWatch, gold futures hit USD 2008 per ounce in the Asian market. It is the first time that gold prices have exceeded $2,000 an ounce since March last year when gold prices soared due to the concentration of safe assets after Russia invades Ukraine.
Recently, gold prices have risen again due to fears of a global banking crisis. Gold prices have risen nearly 10% in the past two weeks. This is due to growing fears of a financial crisis as a liquidity crisis erupted in Credit Suisse (CS), a large Swiss bank, following the series of closures of the U.S. Silicon Valley Bank (SVB) and Signature Bank. The previous day (19th) when UBS, Switzerland's largest financial company, took over CS, eased the crisis of financial collapse, but investors decided that the banking crisis was not over and started buying gold.
Marcus Garvey, a metal strategist at Macquarie Group, said, "CS's amortization of subordinated bonds has increased uncertainty," adding, "The longer the market fear does not completely calm down and does not spread to the banking system crisis, the higher gold prices could be."
Fitch Solutions, a consulting firm affiliated with credit rating agency Fitch, recently raised its gold price forecast for this year from $1850 to $1950, saying in an investment note that the banking crisis has increased its attractiveness for safe assets. "If instability in the global financial system continues over the next few weeks, gold prices could surpass all-time highs," he predicted. Gold prices reached an all-time high of $2075 an ounce in the summer of 2020 when the COVID-19 pandemic was in full swing.
However, some point out that if the crisis deepens, the value of the dollar could jump and weigh on the price of gold. Vivek Dar, an analyst at Commonwealth Bank in Australia, said, "The dollar's strength is not noticeable yet," and pointed out, "If the dollar conducts an aggressive rally as global financial stability falters, it will be a burden on gold prices."
Edited by Palak Chauhan
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