Commodities

Gold, copper advance as SVB fallout triggers flight to safety

Gold and copper rose as the collapse of Silicon Valley Bank spurred investors to seek safe havens.

The American lender’s demise sparked such a severe drop in regional bank stocks that automatic trading halts were triggered on Monday. More broadly, more than half the companies in the S&P 500 Index fell while two-year Treasury yields headed for the biggest daily slump in decades.

“With two-year yields almost down 1 per cent in less than a week and the market increasingly pricing away the prospect for a rate hike, gold has to go higher,” said Ole Hansen, head of commodities strategy at Saxo Bank A/S. “Gold is the most rate- and dollar-sensitive commodity.”

t’s a rapid turnaround for gold, which in the year prior to last week’s rapid meltdown of SVB was down 12 per cent. The precious metal has now jumped above its 50-day moving average, signaling a change in momentum. 

Spot gold rose as much as 2.4 per cent to US$1,913.13 an ounce. It has climbed roughly 5 per cent since the March 8 settlement as concern over SVB grew. 

Copper rose 0.9 per cent to $8,950 a metric ton on the London Metal Exchange at 4:51 p.m. in London. Aluminum rose 0.8 per cent with other base metals also recording gains.