*
Gold hovers near 5-1/2-week peak
*
U.S. dollar index up 0.3%
*
U.S. CPI data due at 1230 GMT
*
Gold short-term outlook strong - ANZ
(Adds comments, graphic, and updates prices)
By Kavya Guduru
March 14 (Reuters) - Gold prices on Tuesday hovered near
their highest levels in more than five weeks, and held above the
key $1,900 level, as expectations grew that the Federal Reserve
could pause its rate hikes after the collapse of two big U.S.
regional banks.
Spot gold was down 0.1% at $1,910.80 per ounce, as of
0726 GMT, after rising more than 2% on Monday to hit its highest
since Feb. 3.
U.S. gold futures also fell 0.1% to $1,915.00. "Safe-haven flows in the aftermath of the SVB's fallout, along with a pullback in hawkish rate expectations, have been supportive of gold prices' upside over the past few days," said Yeap Jun Rong, a market analyst at IG. But some profit-taking might be triggered "as the risk environment attempts to stabilise," he added. U.S. officials have announced several measures to limit the fallout from the now-shuttered Silicon Valley Bank , the largest bank failure since the 2008 financial crisis, and restore investor confidence in the banking system. Regulators closed New York-based Signature Bank on Sunday. Markets are now pricing in a 51.4% chance of the Fed holding rates in the current range of 4.5% to 4.75%. Considered a hedge against economic uncertainties, zero-yield gold also becomes a more attractive bet in a low interest rate environment. "The short (-term) outlook for gold looks strong," analysts at ANZ said in a note, adding that the metal had jumped above its 50-day moving average, signalling a change in momentum.
"With investor allocation relatively low, we expect this to
continue," they said.
The U.S. consumer price index (CPI) report due at 1230 GMT
will be closely watched for cues on the Fed's rate-hike plan.
The dollar index was up 0.3%, making bullion more
expensive for buyers holding other currencies. Spot silver fell 0.1% to $21.78 per ounce, platinum lost 0.5% at $991.29 and palladium shed 0.7% at
$1,463.54.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
xau ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Reporting by Kavya Guduru in Bengaluru; Editing by Sherry
Jacob-Phillips and Subhranshu Sahu)
