The gold It approached the $1,900 level on Monday as investors sought refuge from uncertainty caused by Silicon Valley Bank’s bankruptcy but were encouraged by bets that the Federal Reserve might be forced to moderate its rate hikes.
Spot gold was up 0.9 percent at $1,885.37 an ounce at 0904 GMT. Earlier in the session, prices hit their highest since early February at $1,893.96. U.S. gold futures gained 1.2 percent to $1,889.50.
On Friday, gold gained 2% after California regulators shut down Silicon Valley Bank (SVB). Regulators also shut down New York’s Signature Bank on Sunday.
“Recent developments show that gold remains a safe haven asset as it can benefit from market uncertainty. In addition, the fact that market participants dismiss expectations of rate hikes is boosting gold,” said Giovanni Staunovo, analyst at UBS (SIX:UBSG).
Lower interest rates reduce the opportunity cost of holding gold, which does not yield interest.
Following the collapse of the SVB, traders now expect the Federal Reserve not to raise interest rates by 50 basis points this month, in contrast to the 70% probability that existed before the fact. Rate cuts are also planned for the end of 2023.
Goldman Sachs (NYSE:GS) said Sunday that it no longer expects the Federal Reserve to raise rates at its March 22 meeting.
Gold was favored by the simultaneous retreat of the Dollar Index, which made bullion cheaper for foreign buyers.
Meanwhile, the US authorities announced a series of measures to deal with the financial consequences of the collapse of the SVB, but the stock market continued to sell on European markets.
Among other precious metals, silver It rose 1.4 percent to $20.80 an ounce, the platinum gained 0.7% to $966.29 and palladium It added 1.1 per cent to $1,393.38.