News Bites
Gold market sees little reaction as Bank of America warns that it is preparing for a possible government default
(Kitco News) - The gold market, while off its recent lows, remains below $1,900 and is seeing little reaction to statements from Bank of America that it is preparing for the U.S. government to possibly default on its debt obligations.
In an interview with CNN, Brian Moynihan, CEO of the second largest bank in the U.S., said that a default is an uncomfortable possibility.
"You hope it doesn't happen, but hope is not a strategy – so you prepare for it," he said in the interview.
The comments come as the U.S. hit its debt limit last month. Since Jan. 19, the U.S. Treasury has been using extraordinary measures to pay its bills. Treasury Secretary Janet Yellen has warned Congress that these extraordinary measures could run out by June.
The gold market is not seeing much reaction to Moynihan's comments even as it holds some modest gains late Monday. April gold futures last traded at $1,880.30 an ounce, up 0.2% on the day.
House Republicans have been using debt negotiations to curb what it sees as wasteful government spending. However, the White House has said that raising the debt limit is non-negotiable.
Monday, in an interview with ABC Yellen, said that defaulting on its debt would be an "economic and financial catastrophe."
Many analysts have noted that the growing risk of the U.S. government defaulting on its debt obligations will support gold's safe-haven appeal. However, the threat of a default remains relatively hypothetical.
Bank of America is fairly bullish on gold in 2023; the commodity analysts said it has a path to $2,000 an ounce.
