At the start of the week, a troy ounce of .999 fine gold was trading at $1,813 per unit. Seven days later, gold rose 9.65% against the U.S. dollar to the current spot price of $1,988 per ounce. Gold’s rise comes at a time when confidence in the global banking system is at an all-time low, and five major banks have received bailouts. An ounce of fine silver also increased in value, rising more than 12% from $20.01 to $22.59 per ounce this week.
Gold and Silver Prices Surge Amid Banking Crisis and Expectations of a Dovish Fed
The price of gold is approaching the $2,000 per ounce mark after numerous U.S. and international banks showed signs of extreme weakness. The Federal Reserve lent banks $164.8 billion in five days, erasing almost 50% of the U.S. central bank’s monetary tightening policy. As a result, the market expects a dovish rate hike this month, possibly around 25 basis points, or even no rate hike at all after the financial calamity the banking industry has faced. According to TD Securities’ global head of commodity strategy Bart Melek, this is “good news for gold,” he told Kitco News.
“Markets are concluding that we’ll see the Fed go for another 25bps increase and then probably sit on it for a…