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ECB expected to raise rates by 50 bps later today
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Traders see Fed raising rates by 25 bps next week
(Updates prices)
By Seher Dareen
March 16 (Reuters) - Gold edged higher on Thursday,
helped by a weaker dollar, but prices held below last session's
6-week peak as risk sentiment improved after Credit Suisse, the
latest focal point of a potential banking crisis, secured funds.
Spot gold rose 0.3% to $1,924.15 per ounce by 1122
GMT, after jumping to its highest since early Feb at $1,937.28
on Wednesday. U.S. gold futures fell 0.1% to $1,928.70.
Credit Suisse, which sparked a rout in European banking
stocks on fears of its collapse, recovered 28% after saying it
would borrow up to $54 billion from the Swiss central bank to
shore up liquidity and investor confidence.
While the news had taken a bit of the shine off gold,
bullion seems to have settled at a reasonably firm level, said
independent analyst Ross Norman.
The dollar index was 0.2% lower, making bullion
cheaper for overseas buyers. Gold prices in sterling were off the record-highs hit on Wednesday, while prices in
euros also retreated. Gold was enjoying a "knee-jerk rally", Norman added, with
short covering potentially accounting for a large part of the
gains, yet sentiment was broadly favourable towards gold.
The European Central Bank's meeting later on Thursday looms
in what will be the first scheduled policy announcement since
the collapse of U.S.-based Silicon Valley Bank last week, mostly
due to elevated interest rates, triggered fears of a banking
crisis.
Traders expect the ECB to raise rates by another 50 basis
points. On the other side of the Atlantic, traders largely
expect the Federal Reserve to raise rates by 25 bps at its
policy meeting next week. Bullion is considered a hedge against economic
uncertainties, although higher rates increase the opportunity
cost of holding the non-yielding asset.
Spot silver rose 0.9% to $21.98 per ounce, platinum gained 0.4% to $966.03 while palladium was up 0.6%
at $1,455.81.
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(Reporting by Seher Dareen, additional reporting by Kavya
Guduru in Bengaluru; Editing by Savio D'Souza and Nick Macfie)
