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Gold prices finished at their highest levels in 11 months on Friday and booked their best weekly gain in nearly three years, as fears of a global banking crisis weighed on investors’ sentiment, bolstering the safe-haven appeal of the yellow metal.
Price action
Gold futures for April delivery
GC00,
+3.03%
GCJ23,
+3.03%
gained $50.50, or 2.6%, to settle at $1,973.50 per ounce on Comex, with the most-active contract rallying 5.7% for the week. That was the highest settlement for the yellow metal since April 18, 2022 and its biggest weekly advance since April 2020, according to Dow Jones Market Data.
Silver futures for May delivery
SI00,
+4.16%
SIK23,
+4.16%
climbed by 77 cents, or 3.5%, to end at $22.46 per ounce, jumping 9.5% for the week.
Platinum futures for July
PLN23,
+0.07%
rose $1.5, or 0.1%, to settle at $978.60 per ounce, up 1.7% for the week, while palladium futures for June
PAM23,
-0.66%
declined by $23.20, or 1.7%, to finish at $1,386.10 per ounce, leaving it up 1.8% for the week.
Copper futures for May
HGK23,
+0.76%
increased by 3 cents, or 0.7%, to end at $3.893 per pound, dropping 3.4% for the week.
Market drivers
Gold prices surged, adding to the rally of the past week, as investors turned to safe-haven assets amid the stress in the banking sector on both sides of the Atlantic, while a fall in Treasury yields and the U.S. dollar also provided support.
SVB Financial Group
SIVB,
,
the holding company of the Silicon Valley Bank, on Friday filed for Chapter 11 bankruptcy in New York and said it will seek a court-supervised reorganization.
The move affects the SVB holding company but not Silicon Valley Bank, which is no longer affiliated with SVB Financial Group after the bank was put into Federal receivership last week following a run on its deposits.
Credit Suisse
CS,
-7.18%,
as well as its Swiss regulators, have insisted that it doesn’t have the problems with falling bond prices in portfolios facing U.S. banks, such as the collapsed Silicon Valley Bank. Credit Suisse Group said on Thursday it intended to borrow up to 50 billion Swiss francs ($54 billion) from the Swiss National Bank in what it called “decisive action” to boost its liquidity.
However, at least four major banks have put restrictions on trades that involve troubled Swiss lender Credit Suisse Group or its securities, Reuters reported Friday, citing people with direct knowledge of the matter.
Precious metals analysts said gold is also benefiting from the view that the Federal Reserve might end its cycle of interest-rate hikes at its meeting next week, delivering one final 25 basis point hike before standing pat.
Traders are now betting that the Fed will hike interest rates by a quarter-percentage-point when they meet next week, versus the half-point hike that had been forecast last week before the sudden collapse of Silicon Valley Bank, according to CME FedWatch Tool.
“There is growing speculation that the Fed will repeat next week what the ECB has done this week – raise as expected, then pause. The expectations that the Fed is nearing the end of its tightening cycle have battered the US dollar,” said Raffi Boyadjian, lead investment analyst at XM.
The ECB lifted its policy rate by 50 basis points on Thursday but dropped its forward guidance, saying future hikes would depend on the state of economic data. Some said worries about the stability of U.S. regional banks and Swiss lender Credit Suisse — which recently agreed to borrow 50 billion francs ($54 billion) from the Swiss National Bank — might be giving the biggest central bank in Europe pause.
Hopes that the Fed’s policy interest rate might not rise above 5% were weighing on the U.S. dollar and Treasury yields, which typically benefits gold.
The ICE U.S. Dollar Index
DXY,
-0.50%,
a gauge of the dollar’s strength against a basket of rivals, was down 0.6% at 103.81.
The yield on the 2-year Treasury note
TMUBMUSD02Y,
3.824%
fell to 3.90% from 4.13% on Thursday.
In U.S. economic data, a survey of consumer sentiment slid to 63.4 in March and fell for the first time in four months, reflecting angst among Americans about high inflation and the health of the economy. Meanwhile, the U.S. leading economic index fell 0.3% in February — the 11th decline in a row — continuing to signal an upcoming recession.
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