Gold prices remain near $2,000 as bank fears lead to a bumper quarter

Gold prices were unchanged on Friday, maintaining their proximity to the important $2,000 mark following wild swings this week, but safe-haven demand in the face of a potential banking crisis has left the yellow metal on track for a significant increase this quarter. Prior to staging a rebound on Thursday, when higher-than-expected U.S. jobless claims indicated that the labor market was continuing to cool, gold prices had been teetering around the $2,000 mark for much of this week. This could lead to a decline in inflation.

The Federal Reserve will have less economic leeway to raise interest rates as a result, which is good news for non-yielding assets like gold. Gold futures increased 0.1% to $1,998.95 an ounce, while spot gold increased 0.1% to $1,981.59 an ounce. In the first quarter of 2023, both securities were forecast to increase by around 9%. Through the month of March, gold prices soared as investors flocked to safe-haven assets like the yellow metal in response to fears of a banking crisis.

Although it currently appears that government intervention prevented a worsening of the lending crisis, the failure of numerous U.S. banks prompted investors to start pricing in a less hawkish Fed on the assumption that the central bank would strive to prevent further strain on the economy. In terms of industrial metals, copper prices decreased on Friday as conflicting economic data from China, the world’s top copper importer, suggested a patchy recovery.

As service sector activity increased more than anticipated to a 15-year high, weakening manufacturing sector growth indicated a decline in commodity demand. The price of copper dropped 0.2% to $4.1048 a pound, but it was still expected to rise by over 7% in the first three months. The demand for copper is nevertheless anticipated to be supported this year by a Chinese economic resurgence. The data from Friday also show that a rebound is gathering momentum, albeit at a varying rate.

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