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Gold Poised for Best Week Since Mid-Nov on Banking Crisis

  • Gold set for 3rd straight weekly gain
  • Silver eyes best week since early Dec
  • Gold biased to retest support at $1,917 - technicals

March 17 (Reuters) - Gold advanced on Friday, buoyed by a weaker dollar, and was poised for its biggest weekly gain since mid-November as a global banking crisis sent investors flocking to the safe-haven metal.

Spot gold was up 0.7% at $1,931.90 per ounce, as of 0747 GMT. Bullion has risen about 3.4% this week, heading for a third consecutive weekly gain.

U.S. gold futures rose 0.7% to $1,936.10.

Bullion prices have jumped more than 5%, or by about $100, on safe-haven demand after the collapse of U.S.-based Silicon Valley Bank last week.

Large U.S. banks injected $30 billion in deposits into First Republic Bank on Thursday to rescue the lender caught up in a widening banking crisis. This came after Swiss lender Credit Suisse said it would borrow up to $54 billion from the Swiss National Bank to shore up liquidity.

The banking crisis seemed supportive for gold "because it led to... the general sense that with this market risk and with credit stress, central banks might back off (on hiking rates)," said Ilya Spivak, head of global macro, Tastylive.

But the European Central Bank raised interest rates by 50 basis points (bps) on Thursday, as concerns over high inflation outstripped fears of the banking crisis.

U.S. central bankers are seen pressing on with their inflation-fighting campaign with a 25-bps rate hike at their March policy meeting.

The opportunity cost of holding non-yielding bullion rises when interest rates are increased to bring down inflation.

The dollar index slipped 0.5%, making gold more attractive to buyers holding other currencies.

Gold is biased to retest a support at $1,917, a break below which could open towards a range of $1,905-$1,917, Reuters technical analyst Wang Tao said.

Spot silver climbed 1.1% to $21.95 per ounce, platinum gained 0.9% to $981.04 and palladium rose 0.5% to $1,438.08.

All three metals were bound for weekly gains, with silver set for its best week since early December.

Reporting by Kavya Guduru in Bengaluru; Editing by Sonali Paul, Subhranshu Sahu and Rashmi Aich

Source: Reuters

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