Gold prices rose slightly as investors focused on the ongoing banking crisis in the US, which has increased the safe-haven appeal of the yellow metal in recent weeks.
All eyes are on the two US House and Senate committees hearing on Tuesday and Wednesday that will aim to boost confidence in the banking sector and examine regulatory failures that led to the collapse of Silicon Valley Bank and Signature Bank.
“If turbulence in the banks subsides, we could see gold give back some of its recent gains and from a technical perspective, the two failed runs at $2,000 has left us with a possible double top forming, with the neckline around $1,935,” Craig Erlam, senior market analyst at OANDA, UK, said in a note.
The takeover of beleaguered lender Silicon Valley Bank by peer First Citizens BancShares Inc brought some relief to financial markets, and hit gold’s appeal as a safe-haven asset on Monday.
Prices also fell on Monday amid concerns that the US Federal Reserve may continue with its interest-rate hikes at the upcoming policy meetings despite the ongoing stress in the US banking sector.
The US Fed had last week increased interest rates by another 25 basis points for the second time in a row, which took the federal fund rates to a range of 4.75 percent to 5 percent.
However, the slide in gold prices was limited due to the safe-haven appeal of the yellow metal as fears related to the banking crisis in the US could lead to a credit crunch, according to experts.
“Higher inflation fears and increased geo-political tensions could support precious metals at lower levels,” said Manoj Kumar Jain, director of Prithvi Finmart.
Gold has support at $1,964-1,950 per ounce on COMEX, while resistance at $1,984-$2,000 per ounce, according to Jain. On the Multi Commodity Exchange of India (MCX), gold prices have support at Rs 58,920-Rs 58,660 per 10 gram and resistance at Rs 59,400-Rs 59,720 per 10 gram.
As of 0450 GMT, US gold futures were at $1,977.35 per ounce, up 0.3 percent from the previous close.
At 1022 am, gold was up 0.2 percent on the MCX at Rs 58,613 for 10 grams, while silver was up 0.1 percent at Rs 69,975 a kilogram.
Investors will keep monitoring the situation in the US, and the movement of the dollar. The greenback has experienced steep losses in recent weeks due to the banking crisis in the US. A weaker dollar makes gold and silver cheaper for holders of other currencies, therefore, lifting demand for the precious metals.
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