Market Commentary

Gold Hits $2000 for the First Time in 12 Months

Rahul Joshua
6 Feb 2024 · 1 minute read

Gold prices are trading higher in March as investors rushed to safe-haven assets amid the ongoing global banking crisis. 

The SPDR Gold Trust (GLD:US) gained about 10% in the last 2 weeks after the U.S. and Swiss authorities were forced to calm down concerns about the stability of the banking sector. Still, the collapse of Silicon Valley Bank (SIVB:US) became the 2nd biggest bank failure in the history of the U.S.

On the other hand, the Swiss government and the Swiss National Bank (SNB) were forced to broker the mega-merger between UBS Group (UBS:US) and Credit Suisse (CS:US) after the latter found itself in the biggest trouble since its inception 167 years ago.

Given the importance of the global banking system to markets, and the economy in general, investors seek shelter in gold in bonds. As a result, gold prices hit $2,000/oz for the first time in a year and since Russia invaded Ukraine. The yellow metal prices have since corrected below $2000 as traders shift focus towards the FED rate decision that is due on Wednesday.

“The longer uncertainty rolls on, with neither market fears being wholly calmed nor a full-blown systematic crisis unfolding, the higher gold prices should be able to trade,” said Marcus Garvey, a commodity strategist at Macquarie.

Looking at Congress members’ trade data, we see that Representative Chuck Fleischmann was selling shares of the iShares Gold Trust (IAU:US) in January and October last year. Similarly, Senator Tom Carper was selling GLD and Sprott Physical Gold & Silver Trust (CEF:US) in August last year