Gold prices extend losses as banking concerns subside

Gold prices declined in European trade for the third session as haven demand declines with banking concerns subsiding as authorities intensify efforts to protect the global banking sector. 

Opinions are divided now on whether the Federal Reserve will hike interest rates by 25 basis points in May for the third straight  session to 5.25% or keep current levels unchanged till the end of the year. 

Prices Today

Gold prices fell 0.4% to $1,949 an ounce, with a session-high at $1,964, after losing 1.1% yesterday, the second loss in a row as banking concerns recede. 

Banking Concerns 

Global authorities continue to take measures to support and underpin the banking sector after the collapse of the Silicon Valley Bank in the US and the troubles of the Swiss Credit Suisse Bank. 

Additionally, the First Citizens bank agreed to purchase Silicon Valley Bank and carry its entire loans and private deposits.

‎In Europe, concerns about Deutsche Bank calmed down as well with the stock rebounding as costs of insuring its debts declined.

Deutsche Bank's stock rallied over 6% yesterday after a 9% loss on Friday to five-month lows. 

Expects believe the German bank's status to be strong as it holds onto to large assets to go through any emergency comfortably. 

US Rates

Pricing for a 0.25% rate hike by the Federal Reserve in May stands at 49%, with a 51% chance of no change in policies.

As confidence returns in the US banking sector, the Federal Reserve might to decide on another 0.25% rate hike to 5.25% and hold such levels flat till the end of the year. 

Estimates

Economists believe gold to be the ongoing solid safe haven in the current turbulent environment, , however as such concerns subside, prices might retest the support of $1,945, and potentially head to $1,927. 

The SPDR

Gold holdings at the SPDR Gold Trust remained flat yesterday at  923.97 tones.