Gold briefly surpassed the crucial $2,000 level an ounce for a short period of time on Monday after regulators seized and First Republic Bank’s assets to JPMorgan Chase but could not hold that level. The yellow metal continues to struggle to hold the $2,000 level for nearly three weeks after hitting near-record highs earlier in April. Stronger dollar and rising U.S. Treasury yields on expectation of a likely hike in interest rates by Fed by another 25 basis points on Wednesday are keeping traders on a wait and watch mode. Higher interest rates increase opportunity cost of holding non-yielding assets such as gold. Additionally, no major impact on the stock markets following failure of First Republic bank also held the gold prices in check.
According to Edward Moya, a senior market analyst at OANDA, for gold to make that run back to record highs, there should not be any further rise in interest rates in June. The Fed’s outlook on interest rates and any fresh developments in the financial crisis are likely to decide the course of the yellow metal in the future. Other precious metals moved little on Monday, with platinum and silver futures contributing to about 0.1% each. Amongst industrial metals, copper prices remained flat and are expected to decline owing to manufacturing slowdown across the globe.
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