Gold prices touch lifetime high of Rs 60,100 per 10 grams

“Bullions continue surge, with gold on domestic front hitting a new lifetime high of over Rs 60,000, as a wave of banking crises shook global markets and put bullion on track for its biggest weekly rise in three years, while bets solidified for a less aggressive Fed in its fight against inflation,” Navneet Damani, Senior VP – Commodity Research at Motilal Oswal Financial Services, said.

Ravindra Rao, CMT, EPAT VP-Head Commodity Research, Kotak Securities Ltd said the western banking crisis upended global markets, taking domestic gold prices to a record high, to above Rs 60,000 per 10 grams.

“After rising more than 5 percent in the previous week, gold prices are up 1.5 percent on Monday, amid broad risk off sentiments as UBS-CS deal failed to calm investor nerves. US bonds reversed early losses and yields on two-year treasury notes fell more than 15 bps, to below 3.7 percent, the lowest since September 2022, signalling caution,” he said.

In the overseas markets, both gold and silver were trading higher at $2,005 per ounce and $22.55 per ounce, respectively. Comex Gold prices traded higher in Asian trading hours on Monday and rose to a fresh 52-week high of $2,005 per ounce, Saumil Gandhi said.

However, gold prices backed off from the key $2,000 mark in a volatile trade today as investors are assessing the health of the global banking sector even as increasing bets of a rate pause by the Federal Reserve have kept bullion near its one-year peak.

Spot gold was down 0.6% at $1,976.60 per ounce, as of 1318 GMT, while U.S. gold futures rose 0.5% to $1,983.20. Prices fell over one percent before climbing by the same amount to the metal's highest level since March 2022 at $2,009.59, just shy of a record set during the onset of the pandemic.

"Gold's volatility reflects that the market is digesting the recent shotgun wedding between Credit Suisse and UBS and the possible contagion," said independent analyst Ross Norman.

Prices have rallied more than $100 after the collapse of United States-based Silicon Valley Bank earlier this month, which ensnared 167-year-old lender Credit Suisse.

Gold is considered a safe-haven asset during times of financial uncertainty and lower interest rates reduce the opportunity cost of holding the non-yielding bullion, making it more attractive.

“Today’s rejection above $2000 may trigger some profit taking, but in our opinion not a change in direction,” Ole Hansen, head of commodity strategy at Saxo Bank, said in a note.

“We maintain a bullish outlook for gold, especially if the FOMC, driven by the current banking and liquidity crisis, is forced to change its focus away from fighting inflation to maintaining stability.”

(With inputs from PTI, Reuters)