Gold prices drop 1% after Credit Suisse-UBS deal spurs risk-on mood

Gold prices dropped 1% on Monday, with their safe-haven appeal diminished as risk sentiment improved after Swiss lender UBS sealed a deal to buy peer Credit Suisse in a rescue effort to contain a banking crisis and stabilise global financial markets.

FUNDAMENTALS

* Spot gold was down 1% at $1,969.14 per ounce, as of 0105 GMT, retreating from its highest level since April 2022 hit earlier in the session. U.S. gold futures rose 0.2% to $1,977.60.

* On Sunday, UBS agreed to buy 167-year-old Credit Suisse for 3 billion Swiss francs ($3.23 billion) and assume up to $5.4 billion in losses in a deal backed by a massive Swiss guarantee and expected to close by the end of 2023.

* Top central banks, faced with the risk of a fast-moving loss of confidence in the stability of the financial system, moved on Sunday to bolster the flow of cash around the world.

* Asian stocks steadied and U.S futures rose on Monday in relief at a weekend rescue deal for Credit Suisse, though trade was tense and volatile as contagion fears stalked financial shares.

* The dollar edged up 0.1%, making bullion less attractive for buyers holding other currencies. * A rally in bullion prices sparked by the global banking rout forced Indian dealers to offer steeper discounts on physical gold to lure retail customers and led to a drop in China premiums last week, while tempting some to resort to selling.

* Spot silver dipped 1.4% to $22.27 per ounce, platinum fell 0.4% to $971.92 and palladium eased 0.1% to $1,418.26.