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Gold down for 2nd session in a row
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Growth worries, banking stresses could benefit gold -
analyst
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U.S. dollar up 0.2%
(Adds details, updates prices)
By Kavya Guduru
March 27 (Reuters) - Gold prices fell for a second
straight session on Monday as the U.S. dollar firmed, while
investors weighed measures taken by authorities to assuage fears
of a crisis in the global banking sector.
Spot gold was down 0.5% at $1,967.86 per ounce, as of
0632 GMT. U.S. gold futures slipped 0.8% to $1,968.90.
The dollar index rose 0.2% and made bullion less
affordable for overseas buyers. First Citizens BancShares Inc will acquire all of Silicon
Valley Bank's deposits and loans from the Federal Deposit
Insurance Corporation. The news cast an uneasy calm over fragile
markets on Monday. "Markets continue to adopt a cautious stance... On net, the
mix of growth worries, lingering concerns of banking stresses
could benefit safe-haven proxies such as USD, JPY and gold in
the interim," said OCBC FX strategist Christopher Wong. Gold had risen above the $2,000 mark after the sudden
collapse of two U.S. lenders, but has since pulled back from
those levels after rescue measures by authorities, including
UBS' takeover of ailing Credit Suisse.
However, worries persisted that regulators are yet to
contain the worst shock to the banking sector since the 2008
financial crisis after shares of Deutsche Bank plunged on
Friday.
Recent stress in the sector and the possibility of a follow-on credit crunch brings the United States closer to recession, Minneapolis U.S. Federal Reserve President Neel Kashkari said. The threat of a recession has resulted in investors increasing their allocation to the precious metal in droves, ANZ said in a note.
Markets are pricing in a 70% chance of the Fed standing pat on interest rates at its May meeting, according to the CME FedWatch tool. While gold is considered a hedge against inflation and economic uncertainties, higher interest rates discourage investment in non-yielding bullion.
Spot silver shed 1% to $22.99 per ounce, platinum lost 0.7% at $970.51 and palladium slipped 0.9% to $1,402.79.
(Reporting by Kavya Guduru in Bengaluru; Editing by Sherry Jacob-Phillips and Sonia Cheema)
