Gold price grinds between banking and inflation concerns

Gold price bounced off short-term key support as the US Dollar failed to cheer a rebound in the United States Treasury bond yields amid mixed sentiment and mostly upbeat US data. The reason could be linked to the market’s month-end positioning, as well as recent challenges to the market sentiment emanating from banking headlines.

That said, the United States Conference Board (CB) Consumer Confidence rose to 104.2 in March, versus 101.0 expected and an upwardly revised prior figure of 103.4. Further, US Housing Price Index rose 0.2% MoM in January versus -0.6% expected and -0.1% prior while the S&P/Case-Shiller Home Price Indices matched 2.5% YoY forecasts for the said month compared to 4.5% previous readings.

On the other hand, Wall Street closed with mild losses and the US Treasury bond yields managed to recover but the US Dollar Index (DXY) failed to improve as hawkish Fed bets eased. That said, CME’s FedWatch Tool suggests market players placing near 65% bets on another 0.25% rate hike for May 03 meeting.

It should be noted that the US Dollar couldn’t cheer mixed US data and the market’s indecision about the banking crisis. That said, markets initially cheered the First Citizens BancShares' agreement to buy all of the failed lender Silicon Valley Bank's deposits and loans before highlighting the European Union and the United States policymaker's efforts to defend their respective banking sector.

However, the much-debated $5.4 million Credit Default Swap (CDS) trade of Deutsche Bank weighs on the sentiment of late and allow the Gold buyers to take a breather. Furthermore, US House Speaker Kevin McCarthy said in an interview with CNBC on Tuesday that there was no need for blanket insurance on all bank deposits "at this moment in time," as reported by Reuters. On the same line, Jose Manuel Campa, Chairman of the European Banking Authority (EBA), warned in the German Handelsblatt newspaper, "The risks in the financial system remain very high." The policymaker also added that the rising interest rates continued to weigh on financial markets.