GOLD PRICES climbed above US$2,000 per ounce on Monday as concerns about the global banking system increased demand for defensive assets.
Gold reached US$2,009.59 per ounce during the session, compared with approximately US$1,815 on 9 March, according to Reuters.
The advance brought bullion closer to its 2020 US Dollar peak as investors assessed the fallout from US bank failures and the emergency rescue of Switzerland’s Credit Suisse.
Gold also reached record levels in some other currencies. Reuters reported that the metal traded above A$3,000 per ounce for the first time, highlighting the significance of the rally for Australian investors.
The banking concerns prompted a coordinated response from major central banks.
On Sunday, the Federal Reserve and five other central banks announced measures to improve access to US Dollar funding through their existing liquidity swap arrangements.
The participating institutions included the Bank of Canada, Bank of England, Bank of Japan, European Central Bank and Swiss National Bank.
Central banks offering seven-day US Dollar operations agreed to increase their frequency from weekly to daily, starting on 20 March and continuing at least through the end of April.
The institutions described the arrangements as a backstop intended to ease pressure in global funding markets and limit the effects on credit availability for households and businesses.
Gold’s advance reflects the heightened uncertainty surrounding financial stability. The policy response aims to relieve funding strains, while investors continue to assess whether the banking difficulties will spread or subside.
Disclaimer
This publication is for educational purposes only and does not constitute financial advice. It does not take into account any person’s investment objectives, financial situation or needs. Before making an investment decision, consider whether the information is appropriate to your circumstances and seek advice from a licensed financial adviser where necessary. Past performance is not a reliable indicator of future performance.