Gold tops $2,000 on flight to safety after Credit Suisse collapse
Commodities 1 hour ago (Mar 20, 2023 06:22AM ET)
By Geoffrey Smith
Investing.com -- Gold prices topped $2,000 for the first time in 11 months on Monday, as the collapse of Credit Suisse (SIX:CSGN) stoked fears of wider financial instability and drove investors to haven assets.
Gold futures in Europe rose as high as $2,014.90 an ounce, before retracing to be at $1,990.65/oz by 06:00 ET (10:00 GMT), up 0.7% on the day.
Haven assets such as bullion have performed strongly in the last three weeks, as three mid-size U.S. banks have collapsed, followed by Credit Suisse, a bank deemed by regulators to be a Global Systemically Important Bank (G-SIB). Credit Suisse is by far the largest bank to collapse in the last decade.
The rise in financial stability has convinced a growing number of investors that central banks will have to halt their interest rate hikes, for fear of triggering a broader financial sector crisis. That has brought bond yields down sharply, raising the relative attractiveness of gold, which doesn't bear interest.
Two-year bond yields, which are typically sensitive to interest rate expectations, extended their sharp drop in morning trading in Europe. By 05:00 ET. the benchmark 2-year Treasury note was down 9 basis points to 3.76%. It's now fallen 1.3 percent in the last two weeks. In Europe, meanwhile, the 2-year German note yield was down 20 basis points at 2.24%. It has fallen 1.2 percent since concerns about banks in the U.S. and Europe started to take center stage.
|
