🧐 ProPicks AI October update is out now! See which stocks made the listPick Stocks with AI

Gold rises to $2,000 as economic jitters boost safe haven demand

Published 04/25/2023, 08:23 PM
Updated 04/25/2023, 08:27 PM
© Reuters.
XAU/USD
-
XAG/USD
-
GC
-
HG
-
SI
-
PL
-
FRCB
-
DXY
-

Investing.com -- Gold prices rose to key levels on Wednesday, buoyed by safe haven demand as a string of weak U.S. company earnings and economic data fueled fears of a potential recession this year.

Resurgent fears of a banking crisis also boosted safe haven demand, after First Republic Bank (NYSE:FRC) logged a substantially bigger-than-expected decline in its deposits, souring sentiment towards regional banks.

The yellow metal rose on Tuesday in tandem with the dollar, indicating that investors were largely seeking safe havens amid growing economic uncertainty. This was also accompanied by sharp losses in risk-driven markets, with Wall Street indexes losing between 1% and 2%.

Softer-than-expected U.S. consumer confidence data also pointed to slowing consumption this year, which puts a damper on economic growth.

Spot gold rose 0.2% to $2,001.76 an ounce, while gold futures rose 0.4% to $2,011.65 an ounce by 20:26 ET (00:26 GMT). Both instruments rose sharply on Tuesday, and were set for a third straight day of gains.

“Gold is trying to get back where it belongs, above the $2,000 an ounce level… Gold’s bullish outlook is based on the rising amount of risk that is on the table: earnings risk, slower lending, financial stability concerns, and sticky inflation,” Edward Moya, senior market analyst at Oanda wrote in a recent note.

Uncertainty over monetary policy and a stronger dollar had weighed on gold in recent weeks, as markets were split over when the Federal Reserve could halt its rate hike cycle. The bank is widely expected to hike interest rates by 25 basis points when it meets next week, and is likely to provide some cues on how much higher interest rates will go.

But with economic growth likely to deteriorate under rising interest rates, markets are betting that the Fed could taper its hawkish stance this year to prevent more damage. Still, the bank has given no such indication, with several Fed officials calling for more rate hikes in recent weeks.

Other precious metals also advanced on Wednesday, benefiting from increased safe haven demand. Platinum futures rose 0.5%, while silver futures added 1%.

Among industrial metals, copper prices steadied from recent losses, as the prospect of worsening economic growth pointed to weaker demand for the red metal.

Copper futures rose 0.1% to $3.870 a pound, but were trading down nearly 3% for the week, after falling by a similar margin last week.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.