Collapse of First Republic shows banking turmoil is not over, gold price flirts with $2,000 level bankingsector gold FirstRepublic
This year's third banking failure did not shock the markets, pushing gold above $2,000 an ounce only for a short period on Monday as traders focused on Wednesday's Federal Reserve interest rate announcement.
This comes after a weekend auction for First Republic following the government's seizure of the troubled bank. During the auction, banks, including JPMorgan, PNC Financial Services and Citizens Financial were asked to submit offers. In turn, FDIC will provide new $50B five-year fixed-rate term financing.@business pic.twitter.com/45smR0Ohz8
"It is striking that even though the Fed's emergency lending hasn't expanded any further since the initial crisis in March, use of the Fed's discount window remains extremely elevated," Ashworth noted."In addition, banks have apparently been tapping the Federal Home Loan Banks heavily." The failure of First Republic points to a pattern and the consequences of the Fed raising rates too quickly, said Great Hill Capital chairman Thomas Hayes.
"Gold prices, in particular, have been on a gradual incline for much of 2023 so far, and such worrying indications of more stress in the Banking sector can be viewed as a potential catalyst to add the needed fuel to a rally that has run out of fumes in recent weeks," said CompareBroker.io chief analyst Jameel Ahmad.
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