Gold heads for second monthly rise on US banking turmoil

GOLD bounced back on Friday (Apr 29) on a dip in yields and renewed concerns over the US banking turmoil, putting the safe haven on course for its second monthly rise even as steady US inflation reinforced bets for an interest rate hike next week.

Spot gold was 0.1 per cent higher at US$1,989.91 per ounce by 1:45 pm EDT (1745 GMT), up about 1.1 per cent for the month. US gold futures settled unchanged at US$1,999.10.

The Federal Reserve issued a detailed and scathing assessment of its failure to identify problems and push for fixes at Silicon Valley Bank before the lender’s collapse, promising tougher supervision and stricter rules.

The Fed’s report culminated around the same time as a decline in 10-year Treasury yields, turning gold positive, “but everything hinges on what (Fed chair Jerome) Powell’s going to say next week”, said Daniel Pavilonis, senior market strategist at RJO Futures.

Benchmark yields fell after data showed the pace of overall inflation slowed in March and consumer spending was steady.

But the data also indicated that the underlying price pressures remained strong, prompting traders to add to bets for a rate hike next week.

Elevated rates dull zero-yielding bullion’s appeal.

“Gold seems likely to remain in its tight recent range for now, though a weekly close under US$1,965 could trigger further losses, while bulls would welcome a push back above US$2,000,” said Tai Wong, an independent metals trader based in New York, adding it remains in question whether the Fed would signal a pause.

Gold had scaled a one-year peak of US$2,048.71 in mid-April as the banking crisis unfolded.

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Silver steadied at US$24.95 per ounce, platinum was flat at US$1,077.04, while palladium gained 0.1 per cent to US$1,496.47 – all headed for their second monthly advances. REUTERS