Gold price in international market tops $2,000

Gold bars are displayed at a gold jewellery shop. — Reuters/File
Gold bars are displayed at a gold jewellery shop. — Reuters/File

LONDON: Gold topped $2,000 per ounce for the time in more than a year Monday on haven demand as investors fretted over global bank fears despite the buyout of Credit Suisse.

The precious metal, seen as a safe store of value in times of turmoil, rose as high as $2,009.73 in early morning London deals.

That was the highest level since Russia launched its invasion of Ukraine just over one year ago.

Gold later pared gains to stand at $1,995, which marked a gain of 0.3% from late Friday.

The metal has jumped by almost 9% in value since the collapse of US regional lender Silicon Valley Bank (SVB) ten days ago.

"Continued fallout from the banking sector has seen a flood of money to gold" on "its safe haven qualities", said Kinesis analyst Rupert Rowling.

European bank shares fell sharply Monday despite news that Switzerland's biggest bank UBS has agreed to buy Credit Suisse for $3.25 billion.

Swiss regulators have been forced to step in and orchestrate a deal to prevent a crisis of confidence in Credit Suisse from spilling over into the broader financial system. The deal is expected to close by the end of 2023.

The Swiss finance minister said the bankruptcy of a globally important bank would have created irreparable consequences for financial markets.

It was not yet clear if the deal is enough to restore trust in lenders around the world. The first indication could come when stock markets open in a few hours in Asia, Australia and New Zealand.

The Swiss central bank will supply substantial liquidity to the merged bank, it said at a news conference in the Swiss capital, Bern. It said the deal includes 100 billion Swiss francs ($108 billion) in liquidity assistance for UBS and Credit Suisse.

"With the takeover of Credit Suisse by UBS, a solution has been found to secure financial stability and protect the Swiss economy in this exceptional situation," the Swiss central bank said.

The effect on jobs was not immediately clear. UBS said it expected annual cost savings of some $7 billion by 2027. Credit Suisse shareholders will receive 1 UBS share for every 22.48 Credit Suisse shares held, equivalent to 0.76 Swiss francs per share for a total consideration of 3 billion francs, UBS said.

The Swiss Financial Market Supervisory Authority (FINMA) said it will be possible to continue all the business activities of both banks with no restrictions or interruptions. FINMA said it will coordinate with national and international authorities, namely the US Federal Reserve and the British Prudential Regulation Authority.