SBNY - Gold Treasurys advance as U.S. dollar weakens on prospect of Fed rate halt

2023-03-13 10:31:52 ET

Gold gained strongly in Monday trading after investors reached for traditional "safe havens" like Treasurys and gold amid banking turmoil triggered by the failures of SVB Financial's ( SIVB ) Silicon Valley Bank and Signature Bank ( SBNY ) when investors rushed to pull deposits over fears of a liquidity crunch.

The 10-year Treasury yield dropped almost 22 basis points to 3.49% and at one point fell by more than 50 bps, a six-week low, as traders bet that the Federal Reserve will be more cautious in its rate hike path. Recall that when bond prices rise, the yield drops.

2-year Treasury yield fell even more, down 55 bps to 4.04%. And the 6-month Treasury yield slid 38 bps to 4.71%.

Gold jumped 2.3% to $1,910.40 per ounce at 10.17 AM ET. Silver advanced 6.0% to $21.75 per ounce. Gold mining stocks surged on the turmoil in the financial sector. Invesco DB Precious Metals ETF ( NYSEARCA: DBP ) climbed 1.8% .

Meanwhile, with the prospect that the Fed could hold rates steady next week instead of raising them, the U.S. Dollar Index ( DXY ) fell 0.8% to 103.76. The euro gained 0.6% against the greenback, and the yen strengthened 1.4% against the dollar.

Earlier, SA contributor Marc Chandler digs into how the U.S. banking crisis is swamping other considerations.

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