March 17 (Reuters) – Gold prices rose more than 2% on Friday as a wave of banking crises rocked global markets, putting bullion on track for its biggest weekly gain in three years, while bets on a less aggressive Federal Reserve strengthened in its fight against inflation.
Spot gold rose 2.8% to $1,971.95 per ounce at 1:47 PM ET (1747 GMT), the highest since April 2022. Bullion has added about 5.6% this week, the most since March 2020.
U.S. gold futures rose 2.6% to settle at $1,973.50.
“Gold is rising on fears that more bad bank news could emerge over the weekend and hopes that the Fed will pause its rate hikes next week,” said Tai Wong, an independent metals trader based in New York.
The collapse of Silicon Valley Bank in the U.S. has highlighted banks’ vulnerability to sharply higher interest rates, while a slide in Credit Suisse ( CSGN.S ) shares has added to market turmoil.
“Gold is likely to shine through the chaos as investors adopt a guarded stance,” said Lukman Otunuga, senior analyst at FXTM.
The dollar and stock markets fell, making bullion a more attractive investment. Although considered a hedge against economic uncertainty, gold’s opportunity cost increases as interest rates increase.
The Fed will raise interest rates by 25 basis points on March 22, despite recent turmoil in the banking sector, according to a majority of economists polled by Reuters.
Silver was set for the biggest weekly percentage increase among the four precious metals. It rose 3.1% to $22.38 an ounce on Friday.
Platinum gained 0.1% to $974.21, while palladium fell 2% to $1,401.63.
“The sudden tightening of economic conditions will not help palladium, whose use is largely industrial, although it is technically in the precious complex,” Wong said, adding that platinum “has just been a chronic underperformer and is struggling to shake off its reputation”.
Reporting by Bharat Govind Gautam and Seher Dareen in Bengaluru; Editing by Matthew Lewis and Shounak Dasgupta
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