Investing.com – Updated at 09:55 am GMT
Futures contracts for the yellow metal have now deepened their losses, losing nearly 1.2% of their value, to reach $1,978 an ounce.
It fell 1% to $1,959 an ounce.
Gold prices fell for the second consecutive session during trading on Monday, coinciding with the calming of concerns about the banking crisis, after announcing a deal to acquire the “Silicon Valley” bank a short while ago.
First Citizens BancShares announced Monday that it will acquire Silicon Valley Bank’s deposits and loans as well as some other assets from the Federal Deposit Insurance Corporation (FDIC).
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Yellow metal futures fell 0.6% to $1989.5 an ounce.
It fell by 0.45% to $1,970 an ounce.
The dollar index lost 0.08% of its value, reaching 102.69 points.
gold upon settlement
Gold prices declined when settling last week’s transactions, with an assessment of the course of monetary policy and the developments of the banking crisis.
Upon settlement, April delivery fell 0.6%, or 12.10%, to $1983.80 an ounce.
In total trading for the week, futures contracts increased by 0.5%, achieving the fourth consecutive weekly gain.
The banking crisis and the takeover deal
The markets calmed down a bit after the acquisition of the “Silicon Valley” bank by the “First Citizens Bank” institution, which contributed to the decline in gold prices during these moments of trading, today, Monday, given that gold recovers in times of exacerbation of risks and crises, and vice versa.
“Caution is in the markets right now,” said Christopher Wong, strategist at OCBC FX. However, he added, “The combination of recession fears and continued fears of banking pressures could benefit safe havens such as the US dollar and gold.”
Gold had surged above the $2,000 mark after the sudden collapse of two US lenders, but has since fallen back from those levels after bailouts by authorities, including UBS’ takeover of troubled Credit Suisse.
However, concerns persisted that regulators had not got a grip on the crisis after the worst shock to the banking sector since the 2008 financial crisis after Deutsche Bank (ETR:) shares plunged on Friday.
Neel Kashkari, president of the US Federal Reserve in Minneapolis, said the recent squeeze in the sector and the possibility of an ensuing credit crunch is bringing the US closer to a recession.
Markets are now expecting a fixation of 83.2% at the next meeting, according to .
Gold will rebound?
ANZ Bank said in a note that the threat of a recession has led to investors increasing their allocation to the precious metal by significant numbers.
And after it reached the 2000 level for the second time during the past week, ANZ economists indicated that the yellow metal may witness an increased demand for it during the coming period, in light of the growing expectations that the US Federal Reserve will stop raising interest rates.
The experts of the banking group indicated that it will find great support as it is a safe haven amid the ongoing banking crisis, in addition to the temporary pause on raising interest rates by the US Federal Reserve.
They also note that inflows into gold-backed ETFs have risen sharply in recent weeks.
Gold going down?
While the economists of Standard Chartered Bank suggested a decline in gold prices towards the level of $ 1875 an ounce during the coming months.
In this regard, the experts of the British Bank explained that investors’ evaluation of gold contracts is still far from extreme cases; This indicates that gold is likely to continue to achieve more profits, and this in turn may lead to a strong rise in gold in the very short term; Especially if markets remain concerned about the global banking sector, given that gold is known to help mitigate volatility over relatively short time horizons.
But looking at a relatively longer time range of “three months”, gold will not achieve these excessive gains again, and instead, experts of the British Bank expected it to settle again at around $ 1875.
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