Gold grows as a safe haven value after the 'shock' of the fall of the SVB and the turbulence in the financial markets
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Gold grows as a safe haven value after the ‘shock’ of the fall of the SVB and the turbulence in the financial markets

The growth in the value of gold – temporary in recent days due to turbulence in the financial sector – has been sustained in recent months by geopolitical tensions.

Gold, one of the main safe haven values in times of turbulence, has picked up the gauntlet of the banking shock after the bankruptcy of three US banks and its price has risen in recent days due to the high demand for bullion by investors.

This past Monday the value of the mineral grew by 2.5% and thus expanded the gains that had been accumulating since last Friday due to the transfer of money from large investors from stocks in the banking sector to investment in gold. This Tuesday, in any case, a slight correction can be seen after four days on the rise due to the tranquility that President Biden tried to inject into the financial markets with a speech to the country in which he insured the deposits of citizens in the bankrupt Silicon Valley Bank.

“Gold is benefiting from investors’ risk aversion and the panic that has spread these days from the United States to the other side of the Atlantic,” explains Marc Despallieres, head of strategy and trading at Vantange. “Its price has stabilized around $1,880 per ounce, but it may grow due to the deepening of the banking crisis in the United States “; adds Anuj Gupta, Vice President, IIFL Securities.

The prospect that the crisis over the collapse of Silicon Valley Bank is temporary seems implausible. For now, Moody’s has downgraded its outlook for the US banking system to “negative” from “stable” status. it had until now.

A blow of credibility for a quick recovery of confidence in the financial system that could once again increase interest in investing in gold or other values, such as cryptocurrencies, which have also resurfaced these days. Bitcoin, in fact, increased its value by 19% yesterday and surpassed the 20,000 euro barrier.

The growth in the value of gold – temporary in recent days due to turbulence in the financial sector – has been sustained in recent months by geopolitical tensions, skyrocketing inflation and the interest of China, which places it as the largest buyer of the metal. “Such purchases by central banks have not been seen in the last 50 years,” commented an expert to 20minutos a few weeks ago.

The World Gold Council (WGC) recognized in its latest quarterly report in January that 2022 had been an “exceptional” year in terms of the purchase of gold by central banks. “At the end of the third quarter it was reported that 673 tons had been added to reserves, a historical maximum. In October and November the additions continued, but at a slower pace.”

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