Gold prices drop 1% after Credit Suisse-UBS deal spurs risk-on mood

GOLD prices dropped 1 per cent on Monday (Mar 20), with their safe-haven appeal diminished as risk sentiment improved after Swiss lender UBS sealed a deal to buy peer Credit Suisse in a rescue effort to contain a banking crisis and stabilise global financial markets.

Spot gold was down 1 per cent at US$1,969.14 per ounce, as of 0105 GMT, retreating from its highest level since April 2022 hit earlier in the session. US gold futures rose 0.2 per cent to US$1,977.60.

On Sunday, UBS agreed to buy 167-year-old Credit Suisse for 3 billion Swiss francs (S$4.34 billion) and assume up to US$5.4 billion in losses in a deal backed by a massive Swiss guarantee and expected to close by the end of 2023.

Top central banks, faced with the risk of a fast-moving loss of confidence in the stability of the financial system, moved on Sunday to bolster the flow of cash around the world.

Asian stocks steadied and US futures rose on Monday in relief at a weekend rescue deal for Credit Suisse, though trade was tense and volatile as contagion fears stalked financial shares.

The dollar edged up 0.1 per cent, making bullion less attractive for buyers holding other currencies.

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Gold prices rise as global banking crisis spurs safe-haven demand

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A rally in bullion prices sparked by the global banking rout forced Indian dealers to offer steeper discounts on physical gold to lure retail customers and led to a drop in China premiums last week, while tempting some to resort to selling.

Spot silver dipped 1.4 per cent to US$22.27 per ounce, platinum fell 0.4 per cent to US$971.92 and palladium eased 0.1 per cent to US$1,418.26. REUTERS