March 16 (Reuters) - Gold gained on Thursday, bouncing towards last session's 1-1/2 month peak as concerns about the banking crisis continue after the European Central Bank hiked interest rates despite the ongoing financial stability risks.
Spot gold rose 0.5% to $1,926.90 per ounce by 1429 GMT or 1029 EDT, after jumping to its highest since early Feb at $1,937.28 on Wednesday. U.S. gold futures was up 0.1% to $1,933.60.
Ignoring financial market chaos and calls by investors to dial back policy tightening at least until markets stabilise, the European Central Bank raised interest rates by 50 basis points on Thursday.
"The ECB did surprise the market with a 50 basis point (bp) hike, it is a little unsettling because the reason banks are in trouble is because of rates rising too fast," said Jim Wycoff, senior analyst at Kitco Metals.
"We are seeing continued safe-haven demand for gold with elevated anxiety in the marketplace over this banking crisis."
Investors' focus will now shift to next week's U.S. Federal Reserve policy meeting, with markets largely expecting the U.S. central bank to raise rates by 25 bps.
While bullion is considered a hedge against economic uncertainties, higher rates increase the opportunity cost of holding the non-yielding asset.
Helping bullion further were losses in broader financial markets as shares, bonds and dollar fell. [USD/
The near-term outlook for gold looks bullish, but if the Fed decides to rate hikes by 50 bps next week, then it will pressure bullion, said Daniel Pavilonis, senior market strategist at RJO Futures.
Meanwhile, the number of Americans filing new claims for unemployment benefits fell more than expected last week, pointing to continued labor market strength.
Spot silver was flat at $21.79 per ounce, platinum lost 0.1% to $961.84 while palladium dipped 1.7% at $1,422.47.
