Gold extends losses as banking fears subside

Gold prices fell in European trade for another session away from the psychological level of $2,000 as haven demand slows down. 

Authorities continue to take necessary measures to curb concerns about the banking sector and protect its foundations, following the collapse of the US Silicon Valley Bank.

Gold prices were overall underpinned by prospects of a potential rate cut in the US in the next half of the year. 

Gold Prices

Gold prices fell 0.65% to $1,965 an ounce, with a session-high at $1,979, after losing 0.8% on Friday, the first loss in three days as haven demand slowed down. 

Gold prices lost 0.55% last week, the first weekly loss in a month on profit-taking off one-year high at $2,009.

Banking Fears Subside 

In the US, authorities continue to take measures to underpin the US banking sector and restore confidence. 

US authorities believe the banking sector is strong and flexible despite ongoing pressure on some institutions. 

Authorities also study an emergency lending program to banks to support struggling banks like First Republic. 

Already, the First Citizens BankShares agreed to purchase Silicon Valley Bank in a deal valued at $16.5 billion that carries all of the bank's deposits and loans. 

In Europe, ECB President Christine Lagarde told EU leaders the banking system remains strong. 

Deutsche Bank rose over 7% on Monday after a 9% drop on Friday to five-month lows as costs for insuring the German bank's loans surged. 

Fed Remarks

Minneapolis Fed President Neil Kashkari said the recent pressures on the banking sector and the potential for a credit crisis later made the US closer to recession. 

Fed Rates

Pricing for no change in US interest rates at the May 3 Fed meeting stand at 80%, while pricing for 0.25% rate hike stands at 20%. 

The SPDR

Gold holdings at the SPDR Gold Trust fell 1.45 tones on Friday to a total of 923.97 tones, off a total of 925.42 tones, the highest since October 2022.