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Gold rises to highest level since early February
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Silver races towards best day since last Nov
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Palladium poised for biggest daily gain since July
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Platinum hits over 5-week peak
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Market prices out 50-basis-point Fed rate hike in March
(Updates prices)
By Bharat Gautam
March 13 (Reuters) - Gold and silver prices surged on
Monday, as their safe-haven appeal drew in investors spooked by
the collapse of Silicon Valley Bank, with the crisis also
sparking hopes the U.S. Federal Reserve would have to slam the
brakes on its aggressive monetary policy.
The U.S. dollar and Treasury yields extended their declines
despite efforts by regulators to control the Silicon Valley Bank and Signature Bank turmoil.
"Gold looks very much like it is fulfilling its mandate as a
safe haven," with support from short covering of long exposures,
said Bart Melek, head of commodity markets strategy at TD
Securities.
Spot gold jumped 2.4% to $1,921.06 per ounce by 1:34
p.m. EDT (1734 GMT), the highest since early February. U.S. gold
futures gained 2.6% to settle at $1,916.50.
Other precious metals followed suit, with silver advancing 6.3% to $21.81 per ounce, platinum jumping 4%
to $997.60, and palladium climbed 7.8% to $1,485.74.
"A lot of investors are looking to the precious metal space
as a safe haven against this volatility and this risk ... amid a
much lower interest rate environment, and the U.S. dollar that's
dropping," which is lifting their prices, Melek said. Traders no longer expect a rate hike of 50 basis points by
the Federal Reserve next week and the current projection is for
a 25-basis-point move, with some even expecting no hike at all,
making gold more attractive as it doesn't yield any interest. "The future of gold prices largely depends on whether the
Fed's measures prove effective. If the Silicon Valley Bank's
(SVB) bankruptcy is deemed an isolated incident, gold may lose
some of its recent gains," said Alexander Zumpfe, a precious
metals dealer at Heraeus.
"However, if the crisis leads to a sustained reversal in the
Fed's policy, gold may remain in demand."
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Gold technicals Gold versus dollar, yields ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Reporting by Bharat Govind Gautam, Ashitha Shivaprasad in
Bengaluru; additional reporting by Swati Verma; editing by
Jonathan Oatis and Vinay Dwivedi)
