BBI INFO
1. a look at the market: investors who fear loss continue to put their money into valuable commodities. Intraday, the price of gold on the spot market rose by nearly $50 and has since remained above the $1,900 threshold. At the end of the day, it had gained 2.09%, settling at $1,913.36 per ounce. During the session, market silver had briefly risen above that price. It gained $5.88% to end the day at $21.79 an ounce, just shy of the $22 level.
2. U.S. bond yields plummeted as a result of the influx of hedging demand, and the same was true of bond yields elsewhere. At one time, the yield on U.S. 2-year notes dropped by 60 basis points, all the way down to 4%. The three-day decline in the U.S. stock market to around 4.01% was the largest since the “Black Monday” stock market collapse in October 1987. The yield on the 10-year U.S. bond dropped from 3.7% to 3.54% over the course of a single day, marking a five-week low since February 3. There is now less than 50 basis points of reversal between the rates on 2-year and 10-year U.S. bonds.
3. the FDIC is set to hold another sale for Silicon Valley Bank.
FDIC officials informed Senate Republicans on Monday that they had more leverage in selling Silicon Valley Bank now that authorities have deemed the bank’s collapse to be a danger to the financial system, after failing to find a buyer over the weekend. This allows for more leeway on the part of authorities to give favorable conditions, such as loss-sharing arrangements, to prospective purchasers.
4. U.S. President Biden delivered a speech on the banking system, saying that the Federal Deposit Insurance Corporation has controlled the assets of Signature Bank and Silicon Valley Bank, taxpayers will not bear any losses, and the funds will come from insurance fund fees; Congress and regulators will be required to strengthen bank rules.
5. according to a former assistant secretary of the US Treasury, the Federal Reserve will have to end its high interest rate policy because it is ruining the balance sheet of the banking sector. The vulnerability of the five biggest institutions in the United States is equal to twice the world’s gross domestic product, making the American financial system extremely vulnerable. The US financial problem will eventually impact other countries due to our linked world.
6. The most probable outcome, as shown by Fed interest rate swaps, is that the Fed will not increase interest rates. Traders anticipate a 46% chance of no change in interest rates from the Federal Reserve in March, and a 54% chance of a rate hike of 25 basis points. Traders also anticipate a modest rate hike of 25 basis points from the Bank of England.
7. Nick Timiraos says the SVB episode will give the Fed the opportunity to direct its attention where it sees fit.
Megaphone for the Federal Reserve According to an article by Nick Timiraos, a common saying holds that the Federal Reserve will keep raising interest rates unless something catastrophic happens. It came as a huge shock that last year’s rate increases seemed to have no negative effect, but that’s no longer the case. Following the failures of Silicon Valley Bank and Signature Bank on Monday, regional bank equities plunged, putting pressure on the Federal Reserve to deal with financial stability concerns while combating inflation, a situation it has been attempting to prevent for the past year. That situation could compel Federal Reserve Chairman Jerome Powell and his peers to prioritize issues.
8. Eight, concerns have been raised about the Federal Reserve’s oversight of Silicon Valley Bank. The failure of Silicon Valley Bank has led some to doubt how well the Federal Reserve was supervising banks generally. After the unexpected failure of Silicon Valley Bank, authorities in the United States offered a liquidity strategy to stabilize smaller financial institutions. Authorities in the San Francisco Federal Reserve and the state of California are being closely examined by the Biden administration, according to those in the know. On May 1st, the Federal Reserve will publish a report detailing the results of its investigation into its supervision of SVB.
9. U.S. money center institutions have raised the size of their short-term bond sales, and Fannie Ma has delayed its high-risk mortgage bond issuing deals as a result of market volatility.
10. For the low, low price of 1 pound, HSBC Holdings has announced that it will purchase Silicon Valley Bank’s UK affiliate. This entity is expected to have real assets of around £1.4 billion.
MARKET VIEWPOINTS
Banco ANZ
At present, $1960 appears to be Gold’s next point of opposition.
Despite increasing U.S. unemployment and the failure of Silicon Valley institutions, gold prices broke through critical support at $1,845 last Friday, indicating that the positive trend may continue. However, buyers should be cautious of fake breakthroughs. Gold needs to stay above $1,850 if the rise is to continue, with $1,960 as the next support level. If gold prices fall below $1845, we could see more stabilization until a breach below the critical support level at $1810. If $1,810 is also breached, this could set off a fundamental sell-off in gold, sending prices tumbling toward the year’s bottom of around $1,750. Silver’s performance this year is anticipated to be superior to gold’s in a rising-price climate, and the silver market is anticipated to stay undersupplied this year.
Analyst of the Market at TickMill Group, James Harte
For gold to profit from a shift in Fed forecasts, the outlook must shift.
Lower U.S. bond rates caused by economic data and dangers encircling SVB in recent days, as well as a rise in safe-haven demand from investors, propelled the precious metals market to a strong start to the week. The Fed is anticipated to keep its modest 25 basis point hike in interest rates this month despite stronger-than-expected non-farm payrolls statistics and higher-than-expected unemployment. The Fed’s plans to raise interest rates have changed significantly again in response to the growing SVB problem. As a result of worries that other institutions may also be at danger of withdrawals, the Fed is anticipated to adopt a less aggressive posture. Goldman Sachs and other financial firms have been predicting that the Federal Reserve will wait until next month to increase interest rates while it continues to watch the situation at SVB. Gold and silver prices will likely be determined by Tuesday’s CPI and the forthcoming SVB-related data. If the predicted decrease in core CPI for February materializes, it will improve the odds that the Fed will raise rates incrementally or hold steady this month. Here, we expect the greenback to decline while gold and silver prices continue to rise.
Michael Boutros, a Senior Technical Analyst in the Forex Market
The rising price of gold can be attributed to two reasons.
Gold prices are rising as investors fear a widespread financial meltdown in the wake of the Silicon Valley banking problem and question the Federal Reserve’s ability to continue tightening policy as vigorously as it has indicated. The next major support zone for gold is $1912-1918. Overbought conditions will set in for gold if it can’t move out of the $6 level that has been so important for the metal. If gold prices were to finish the week above that level, it would indicate a continuation of the larger rise that has been occurring. As gold tries this level, I’d take a more cautious stance. Tonight’s Consumer Price Index figures will also be pivotal for bullion. The Fed’s assessment will be clouded by market volatility, but if inflation rises, the central bank will stick to its plan to strengthen monetary policy. Current market sentiment is divided on whether or not the Federal Reserve will increase interest rates by 25 basis points on March 22. Still, I believe the CPI data will play a significant role in the Fed’s final choice.
The market’s current focus on the Fed’s expected interest rate hikes presents an opportunity for gold to rise. However, if things shift, gold could be hit by a severe sell-off. Because of the venomous nature of the market, gold could abruptly shift upwards, but it also could experience violent floods. Although I see an obvious rise on gold’s fundamental surface, my safety net remains set at $1807.
Co-Director, Walsh Trading, Sean Lusk
This financial threat may have both positive and negative effects on gold.
Short-term, gold will suffer as banks liquidate gold holdings to address their own financial woes. On the other hand, financial industry concerns may boost gold prices in the near term but work against them in the long run. Gold’s position as a secure refuge has been emphasized, and its price has increased, while the dollar’s depreciation and fall have contributed to crisis relief efforts. However, once uncertainty decreases, gold prices are likely to fall because the Fed will have to keep increasing interest rates to combat inflation. It’s also not obvious how long this crisis will last, how far it will extend, what industries and organizations it will hit, or what repercussions it will have for those that do. Quite a bit remains a mystery.
The gold market will receive a bearish indication if the day ends with a price below $1880, which could pave the way for a decline to $1840. If 1840 is also broken, a possible Double bottom pattern support level of 1812 will be investigated. If, however, the gold price is able to close at or above US$1913, then not only will it have higher positive potential and consider the US$2000 mark, but silver will also consider the US$24 level once more.
