BBI INFO
1. One example of the market’s reaction to the European Central Bank’s interest rate decision is the $20 drop in the price of gold from its daily peak to below the $1910 level, followed by a recovery that saw the price of gold end the day up 0.03% at $1919.34 per ounce. The price of silver on the spot market dropped throughout the day, reaching a low of $21.45 per ounce, before ultimately settling at $21.68, down 0.43 percent.
2. The Federal Reserve’s balance sheet increased by US$300 billion to US$8.69 trillion, the amount in November of last year, as discount window utilization in the previous week surpassed that of the financial crisis time.
3. $30 billion in deposits from 11 major U.S. institutions make up the First Republic Bank. It was met with approval from the government agencies in charge of the financial sector. As Powell noted in his remarks, this demonstrates the robustness of the financial system.
4. The week ending March 15 saw the biggest weekly money transfers into the U.S. money market ($120.93 billion) since 2020 ($100.78 billion). This was reported by the Investment Company Institute (ICI).
5. Credit Suisse and UBS reportedly opposed a forced merger, and the Swiss government held a special meeting to demand accountability from the relevant responsible persons at Credit Suisse. The Swiss People’s Party also opposed providing state guarantees for Credit Suisse.
6. U.S. Treasury Secretary Yellen made that statement after Silicon Valley Bank failed.
U.S. banks continue to be very safe investments.
7. the 192,000 initial applications for unemployment benefits in the United States last week were fewer than the predicted 205,000. The prior estimate has been reduced from 21.1 to 212,000, the biggest decrease since July of last year. In March, the Philadelphia Fed factory indicator in the United States hit a new low of -23.2, the lowest reading since May 2020.
8. Credit Suisse plans to buy up to 2.5 billion U.S. dollars in dollar-denominated bonds and up to 500 million euros in euro bonds due in 2023 and 2024 with the funds it expects to borrow from the Swiss National Bank’s liquidity facility. Upon receiving adequate security, the SNB has verified that it will provide funding to Credit Suisse.
9. With a steady prognosis, Standard & Poor’s has reaffirmed the United States’ “AA+” credit rating.
MARKET VIEWPOINTS
According to Ed Moya, an expert at OANDA,
As the financial situation eases, gold prices cool off.
After overnight rumors that JPMorgan Chase, Morgan Stanley, and other large banks were contemplating helping out First Republic Bank, the gold price started to rise as investors sought to benefit from the lessening of banking sector upheaval. Fast money investors saw that getting gold to $1,950 might not happen, so they started locking in gains. The price of gold has risen dramatically over the past week, but those advances may be slowing. Although the financial sector’s performance will still be carefully monitored by Wall Street, there is increasing confidence that the problem can be controlled. Gold may give up its profits if the market’s risk appetite recovers and more reports suggest that Credit Suisse and First Republic can be saved.
Commerzbank
In order for gold to make its next move, market volatility must subside.
When and if the market chaos calms down, and if the Federal Reserve is able to increase interest rates, will determine the next step for gold. Increasing bank failures or market awareness of risk spread could lead to a further decline in interest rate forecasts, which would be bullish for gold prices. Since we anticipated the market would begin wagering more on reduced interest rates in the second half of the year, we had earlier estimated a gold price of $1,950 for year’s end. As a result of the recent upheaval in the financial industry, however, the payout on that wager is now anticipated to occur sooner than previously thought. Therefore, gold prices are anticipated to hit $1950 sooner if bank threats persist. If however, banking worries can be reduced, the Fed may proceed with further interest rate hikes in an effort to rein in persistently high inflation. In such a scenario, gold could lose some of its recent advances. However, we still anticipate a recovery in gold prices in the second half of the year, as the effects of bold rate increases should begin to be felt in the actual economy. At that point, investors’ attention will shift to the prospect of interest rate reductions, raising the price of gold compared to other assets.
John LaForge, Wells Fargo’s director of real estate strategy
Despite the impending economic downturn, the commodity markets are in a stellar cycle, with gold leading the way. All markets will be fundamentally undersupplied for the duration of the commodity supercycle, which started in March 2020 and is expected to last for at least another six years. Gold hit low in 2015, at around $1,000, during the last period, which lasted from 2011 to 2020. A super cycle in the commodity market can have far-reaching effects and spur the involvement of numerous financial actors. Inflation caused by the super cycle will force central banks to raise interest rates even in the face of sluggish economic growth, putting additional strain on governments that are already struggling under the weight of debt. War seems likely given the current financial catastrophe. Gold’s value will also be affected by the government’s policy toward high-interest loans.
From its all-time peak above $2,000 in the middle of 2020, gold has failed for the past three years and is now cheap. Because of its relative stability, gold is an attractive investment as states struggle to pay their obligations in the face of increasing interest rates. The price of gold has historically doubled during each hyper cycle. Gold started this run off at a price of around $1,500 USD. Within this period, we anticipate that the price of gold will increase to at least $3,000.
Author and director of TheDailyGold.com, Jordan Roy Byrne
These three signs are important to watch for the short-term direction of the gold market.
The Fed will have to stop increasing interest rates and relax monetary policy while inflation stays comparatively high because of the problem in the financial sector and the danger of a potential harsh landing. This could temporarily boost market risk sentiment, halting gold’s unexpected rise. We now know, however, that this was not the actual outcome. Therefore, in order to comprehend the near-term trend and prognosis for gold, we must concentrate on three crucial signs. Gold’s behavior near the $1950 opposition level is the first example. This level acts as weekly, monthly, and yearly resistance. Gold’s March closure above $1,953 would be its best monthly close in almost three years and its highest quarterly close ever.
Gold’s performance relative to the stock market and gold’s performance relative to a collection of foreign currencies must also be monitored. These two factors typically determine or forecast the gold price’s upcoming movement. Gold’s closing price on Wednesday was its third highest in two years versus equities and its second highest versus a group of currencies. a month’s peak.
