(MENAFN) The price of gold surged past USD2,000 on Monday, reaching its highest level in a year as global financial markets faced a potential banking crisis. According to official figures, the price of gold climbed to as high as USD2,014.90 per ounce, a level not seen since March 10, 2022.
Investors have been turning to safe haven assets like gold due to concerns over the spillover effect of the banking crisis. As a result, the US Federal Reserve is expected to avoid an aggressive approach to interest rate hikes, which is in turn benefiting the gold market as rates fall.
Enver Erkan, the chief economist at Dinamik Yatirim, noted that market stress and risk aversion are also contributing to the positive performance of gold. Safe instruments are being re-evaluated by investors as they look for secure ways to preserve their capital amid the uncertainty.
On Sunday, Swiss banking giant UBS announced its takeover of troubled lender Credit Suisse for around 3 billion Swiss francs (USD3.25 billion) with the backing of Swiss authorities. However, the deal has wiped out 16 billion francs (USD17.3 billion) in Credit Suisse AT1 bonds, contributing to the increasing concerns over the banking crisis.
To address this issue, major central banks are making efforts to boost dollar liquidity through swap arrangements. These measures aim to stabilize the financial markets and prevent further fallout from the banking crisis.
As gold prices continue to rise, investors are turning to the precious metal as a safe haven asset to protect their wealth. The current market conditions are favorable for gold, and analysts predict that the price will remain high as long as concerns over the banking crisis persist.
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