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Gold hits highest since early Feb
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U.S. dollar index down 0.7%
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U.S. officials step in to stabilise banks
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Markets pricing in rate cuts later this year
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ANZ lifts year-end gold forecast to $2,000/oz
(Adds graphic and details, updates prices)
By Kavya Guduru
March 13 (Reuters) - Gold prices jumped more than 1% on
Monday as fears of a fallout from the largest U.S. bank failure
since the 2008 financial crisis drove investors to the
safe-haven asset.
Spot gold was up 0.6% at $1,878.54 per ounce, as of
0631 GMT. Earlier in the session, bullion hit its highest since
Feb. 3 at $1,893.96.
U.S. gold futures gained 0.9% to $1,884.30.
"Gold has certainly sprung back to life, with safe-haven
flows sending prices to within a cat's whisker of $1,900," said
Matt Simpson, a senior market analyst at City Index.
Gold rallied 2% on Friday after California regulators closed
tech startup-focused Silicon Valley Bank (SVB) .
Regulators also shuttered New York-based Signature Bank on Sunday.
Helping gold's advance was a sharp retreat in the dollar. "Fears of market contagion and stresses may prompt Federal
Reserve officials to reconsider the pace of hikes at the
upcoming FOMC (Federal Open Market Committee) meeting as
preserving financial stability takes precedence," said OCBC FX
strategist Christopher Wong.
Considered a hedge against economic uncertainties,
zero-yield gold also becomes a more attractive bet in a low
interest rate environment.
Traders have priced out a 50 basis-point hike in March, in
contrast to a 70% chance before the SVB collapse. Rate cuts have
also now been priced in by end-2023. Goldman Sachs said on Sunday it no longer expected the Fed
to deliver a hike on March 22. Goldman had previously expected a
25 basis-point hike in March.
The revised rate expectations, combined with measures by
U.S. officials to battle the financial fallout from SVB's
collapse, boosted riskier assets, but gold has so far held onto
most of its gains. "When it becomes apparent that the risk is contained, gold
will be less appealing as a safe-haven," City Index's Simpson
said.
Silver added 1.2% at $20.76 per ounce, platinum was 0.7% higher at $965.61 and palladium climbed
2.4% to $1,412.51.
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(Reporting by Kavya Guduru in Bengaluru; Editing by Subhranshu
Sahu and Sherry Jacob-Phillips)
