(News Bulletin 247) – The precious metal has risen by around 9% since the start of the doubts surrounding the banks.

The price of gold, propelled by growing concerns about the banking sector after the takeover at a knockdown price of the Swiss giant Credit Suisse, exceeded the symbolic threshold of 2,000 dollars an ounce on Monday.

While the titles of the big banks plunged on the stock market Monday after the takeover by UBS of Credit Suisse, investors fearing a chain reaction fell back on gold, a traditional safe haven.

The yellow metal gained some 0.33% to 1,995 dollars in the morning around 11:15 a.m., after rising to 2,009.73 dollars, at a peak for a year. Since the bankruptcy of the American Silicon Valley Bank (SVB) ten days ago, the price of gold on the financial market has risen by almost 9%.

Beneficial changes in rates

Gold had passed the $2,000 mark only twice: in August 2020, in the midst of the Covid-19 pandemic, when it hit an all-time high of $2,075.47, and in March 2022, during the first weeks of Russia’s invasion of Ukraine.

Gold is “very attractive at a time when holders of large accounts in failing banks are wondering how much they will be able to recover”, commented in a note Rupert Rowling, analyst for the precious metals buying platform Kinesis Money.

Moreover, investors are wondering if the central banks, which have been raising their rates for many months to fight against inflation, will not be forced to slow down because of the damage they are causing to the banking sector.

In this scenario, lower key rates despite still high inflation could still benefit gold. Other assets, which had benefited for years from low rates and the influx of liquidity on the market but suffered in recent months from monetary tightening, and therefore soared in recent sessions, like the giants of tech, and bitcoin. It has “a strong correlation with tech stocks, and is up 45% since its March low,” comments Ipek Ozkardeskaya, analyst at SwissQuote.

(with AFP)