Islam Saeed Books
Sunday, March 19, 2023 12:00 AM
Gold continues to get support from the American banking crisis, and during the past few days banks are seeking to provide solutions to create cash liquidity for the affected banks, whether in the United States or Credit Suisse Bank in Switzerland, and despite this, the collapse continued in the shares of these banks and cash continued to exit from Regional banks in the United States to major banks, which supports gold’s rise to $2000 levels, after prices recorded $1988 at the end of the week.
The transfer of cash liquidity outside regional banks and small banks doubled the demand for cash liquidity, which prompted them to sell the bonds they owned at losses due to the current high interest rates compared to the interest rate at the time of purchasing these bonds, and all this in order to fulfill the requests of bank customers is what increases Chances of more small and medium banks faltering during the coming period.
Credit Suisse, a bank in Sri Lanka, said it would borrow up to $54 billion from the Swiss central bank to support liquidity. While large US banks under the supervision of the authorities pumped deposits worth 30 billion dollars in the First Republic Bank on Thursday to save the bank, which is besieged in a widening banking crisis.
On the other hand, data was issued from the US Federal Bank stating that US banks obtained emergency liquidity in a record manner during the past days since the collapse of the Silicon Valley and Signature banks. Compared with the previous record by $112 billion in the second half of 2008 during the global financial crisis.
In addition to this, US banks withdrew $11.9 billion from the term bank lending program established by the US Federal Reserve, following the fall of the two banks at the end of last week.
Despite the emergency measures to support the banking sector, the negative impact continued. The S&P500, the most popular index of US stocks, fell yesterday by 1.1%, while the Dow Jones index fell yesterday by 1.2%.
The main Euro Stoxx 50 index of European stocks fell by 1.3% during yesterday’s session, before losing 3.9% on a weekly basis, after being severely affected by the Credit Suisse crisis.
As for the two-year US government bonds, they witnessed during the past week the largest decline for three days since the “Black Monday” incident in October 1987, as it recorded the lowest level since the beginning of September 2022 by 3.7466%, after a decrease during the week as a whole by 16.3%.