Gold News

Gold Price Heads for Strongest Month in 31 as Bond Yields Sink Fastest Since 2008

The GOLD PRICE held in a tight $10 range on Wednesday, showing a 6.1% gain for March to date as global stock markets extended their rebound and longer-term borrowing costs rose from the last fortnight's banking-scare slump.
With gold trading around $1965 per ounce, the precious metal held on track for its strongest monthly rise since August 2020, when it set the current all-time gold high of $2075 amid the first-wave Covid pandemic lockdowns.
Two-year US Treasury yields jumped over 0.1 percentage points to 4.13%, sharply above last Friday's 6-month trough of 3.76% but still on track for the steepest monthly drop since January 2008 – eve of the Bear Stearns' failure which first took gold prices up through $1000 per ounce.
2-year US Treasury bond yields, month-on-month change in annual percentage return offered to new buyers. Source: St.Louis Fed
Across the entire US Treasury curve on Tuesday, and following last week's Federal Reserve rate rise, only 4- and 6-month bills showed a higher rate than the cost of borrowing Fed Funds, offering 4.86% and 4.90% respectively against the overnight reserves' rate of 4.83%.
New data yesterday said that US consumer confidence has improved slightly in March, but the Conference Board's finding contradicts the University of Michigan survey, which shows the first monthly drop in sentiment since November.
"Everybody's waiting for a recession, but the economic news continues to be pretty good," Reuters quotes one analyst.
Because a weaker economy is expected to mean lower interest rates, in turn meaning a boost for equity prices, "It's hard for the market to bounce when everybody's looking for bad news even if the bad news isn't there."
With 14-carat gold jewelry already "popular" in the USA, says today's Financial Times, UK jewellers are also now using this lower 58% fine alloy, offering customers a "slightly easier buy-in price point" as the UK gold price in Pounds per ounce heads for a record high monthly average at £1572.
Gold priced in Pounds today edged back to £1590, down 3.3% from last week's new all-time high.
The Euro gold price also edged back, dropping to €1810 per ounce to trade 4.0% off this month's high and 4.8% below last March's record, hit on the financial markets' shock at Russia's invasion of Ukraine.
"Hard landing & financial instability risks [are now] handcuffing the Fed" from raising interest rates to combat inflation, says strategist Nicky Shiels – winner of the LBMA's 2022 gold forecast survey with her consensus call of $1800 per ounce – at Swiss bullion refining and finance group MKS Pamp.
With gold so far topping Shiels' full-year annual average forecast of $1880 by $8 per ounce, she now sees the precious metal averaging $1930 across 2023, saying that her "conviction lies in higher floors vs runaway upside repricing."
"The banking system tensions [are] easing," says Rhona O'Connell at brokerage StoneX, "but we’re not quite out of the woods. Liquidity is better than it was in and post GFC, but still needs husbandry."
US regulators clashed with lawmakers at a Senate committee Tuesday, pushing back on accusations of being "asleep at the wheel" on Silicon Valley and Signature Bank but admitting that their rules and oversight need to adapt to new technology, management and customer-deposit behaviors.

Adrian Ash

Adrian Ash, BullionVault Gold News

Adrian Ash is director of research at BullionVault, the world-leading physical gold, silver and platinum market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and he has now been researching and writing daily analysis of precious metals and the wider financial markets for over 20 years. A frequent guest on BBC radio and television, Adrian is regularly quoted by the Financial Times, MarketWatch and many other respected news outlets, and his views from inside the bullion market have been sought by the Economist magazine, CNBC, Bloomberg, Germany's Handelsblatt and FAZ, plus Italy's Il Sole 24 Ore.

See the full archive of Adrian Ash articles on GoldNews.

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