Banking crisis impact: Rate cut in US prerequisite for sustained gold rally

The current surge in prices of yellow metal, sparked by the banking crisis, may be followed by a period of volatility

With a banking crisis unfolding across the United States (US) and Europe, investors have turned to gold, the classic safe-haven asset, sparking a 4.6 per cent rally over the past week. However, the continuance of this rally remains uncertain and will be determined by a host of factors.

Triggered by banking crisis

When interest rates rise by such a large quantum (450 basis points in the US) within a short span of time, there is always the possibility of some pocket of the economy taking a hit. In this instance, it is the start-up space that has borne the brunt,