Gold’s bona fides as an inflation hedge have been tested since the start of last year, but investors have bought up the precious metal in the past week as trust in the banking sector falters. And while bank stocks levelled off after an initial sell-off on Monday morning, alternatives have retained their attractions.
Helped along by expectations that central banks will wind down interest rate increases, gold hit $2,000 (£1,635) an ounce (oz) for the first time in a year this morning. The ongoing developments in the banking world have helped drive up the price from around $1,810 an oz the day before Silicon Valley Bank announced it would need to raise cash.
The price subsequently dropped back below the $2,000 mark on Monday, but inflows into gold ETFs have strengthened in recent days, per World Gold Council data. Peel Hunt analysts noted the precious metal price had form for rising at times of market uncertainty.