- The gold market is holding on to solid gains Sunday evening after a strong open driven by growing concerns that the U.S. banking sector is on the verge of another financial crisis.
As contagion risks spread, U.S. regulators have quickly stepped up to stabilize markets and reassure jittery consumers. The Federal Deposit Insurance Corporation and the Federal Reserve, in consultation with President Joe Biden, announced that depositors at SVB and Signature would be made whole. While the government and central bank have quickly stepped in to calm markets, analysts said that this could be the start of a domino crisis within the economy as the Federal Reserve's aggressive monetary policy starts to weigh on financial markets.
In the current environment of growing uncertainty, many analysts have said that this could just be the start of gold's run higher as investors look for real assets to protect their wealth. "The Fed should and will likely be more dovish given unforeseen financial instability," said Nicky Shiels, head of metals strategy at MKS PAMP, in a research note Sunday.At the start of last week, markets were starting to price in the potential for the Federal Reserve to raise interest rates by 50 basis points at the next two meetings. However, those expectations have once again dramatically shifted.
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