Gold slips from 60000 level as investors assess banking concerns

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Gold slips from 60000 level as investors assess banking concerns

Gold yesterday settled up by 0.21% at 59506 after prices backed off from the 60000 mark in a volatile trade as investors assess the health of the global banking sector even as increasing bets of a rate pause by the Federal Reserve kept bullion near its one-year peak. Investors will keenly watch a Fed policy decision due on Wednesday. Traders are now pricing in a 49% chance of the Fed holding rates in the current range. Risk aversion gripped financial markets despite global central banks announcing measures to provide dollar liquidity in a bid to stem the fallout from panic in the banking sector. Similarly, concerns mounted about the health of the global financial system despite UBS Group AG (SIX: UBSG ), Switzerland's largest banking group, agreeing to buy the crisis-hit Credit Suisse (SIX: CSGN ) Group AG in a historic, government-brokered deal. A rally in bullion prices sparked by the global banking rout forced Indian dealers to offer steeper discounts on physical gold to lure retail customers and led to a drop in China premiums while tempting some to resort to selling. Discounts in India widened to their highest in six weeks, as local gold prices jumped not far from the record high hit last month. Indian dealers were offering a discount of up to $27 an ounce over official domestic prices, up from $2 last week. Technically market is under short covering as the market has witnessed a drop in open interest by -4.13% to settle at 8557 while prices are up 123 rupees, now Gold is getting support at 59007 and below same could see a test of 58508 levels, and resistance is now likely to be seen at 60230, a move above could see prices testing 60954.

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