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Dollar en route to 0.4% fall for the week
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All eyes on Fed policy meeting next week
(Recasts throughout with updated prices and fresh comments)
By Seher Dareen
March 17 (Reuters) - Gold prices rose over 1% on Friday
and looked set for their biggest weekly gain since mid-November
as a global banking crisis kept investors on tenterhooks,
bolstering the safe-haven appeal of the metal.
Spot gold was up 1.6% to $1,948.90 per ounce at 1320
GMT (9:20 a.m. ET ). Bullion has risen about 4.3% this week,
heading for a third consecutive weekly gain. U.S. gold futures rose 1.6% to $1,953.80.
"Gold bulls are drawing ample strength from risk aversion
and expectations around SVB’s forcing the Fed to adopt a less
aggressive approach to rates due to contagion fears," said
Lukman Otunuga, senior research analyst at FXTM. The collapse of Silicon Valley Bank (SVB) in the U.S. has
highlighted banks' vulnerabilities to sharply higher rates,
while a rout in Credit Suisse shares has added to market
turmoil.
SVB Financial Group on Friday filed for a reorganization
under Chapter 11 bankruptcy protection. The move to commence
bankruptcy proceedings comes as emergency measures to shore up
confidence have so far failed to dispel worries about a
financial contagion.
"Gold is likely to shine through the chaos as investors
adopt a guarded stance," Otunuga added.
The dollar and stock markets slipped, making bullion a more
attractive investment. Gold is also considered a hedge against
economic uncertainties, yet its opportunity cost rises when
interest rates are increased.
"We have to keep a very close eye on what the Fed does (next
week)...a 25 bps rate hike is already priced in, but it will be
interesting to see what guidance we get from (Fed Chair) Jerome
Powell afterwards," said Ricardo Evangelista, senior analyst at
ActivTrades. Spot silver rose 1.4% to $22.01 per ounce, platinum gained 1.3% to $985.68 while palladium dropped
1.1% to $1,414.42.
All three metals were bound for weekly gains, with silver
set for its best week since early December.
(Reporting by Seher Dareen in Bengaluru; Editing by Sonia
Cheema and Mark Potter)
