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Gold prices rebounded on Wednesday as a new crisis in the banking sector turned investors away from seemingly riskier assets and drove them to the safety of bullion.
Spot gold traded 1% higher at $1,922.65 per ounce by 1 p.m. ET, rising to its highest since early February. US gold futures gained 1.5% to $1,940.90 per ounce in New York.
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The latest rally comes despite a sharp jump in the US currency, which would usually weigh on demand for the greenback-priced bullion.
Europe’s bank stocks came under pressure again, with Credit Suisse shares sliding after its largest investor said it could not provide the Swiss bank with more financial assistance.
“It’s a total safe-haven trade. There’s a lot of concern about Credit Suisse and now European banks are really coming under quite a bit of pressure. So it’s a complete flight to safety,” Phillip Streible, chief market strategist at Blue Line Futures in Chicago, said in a Reuters note.
Gold prices in sterling hit a record high in the aftermath, while bullion in euros also spiked towards all-time peaks hit last year.
“People are going to the US Treasuries, gold, silver, and the dollar. They’re exiting riskier assets like US equities and economically sensitive metals like copper, platinum and palladium,” Streible added.
Overall focus was still on the Federal Reserve’s next move on interest rates as it assesses data showing elevated inflation in February against the backdrop of the collapse of two regional banks.
Markets put a 57.1% chance on the Fed holding its benchmark rate at current levels at its March 21-22 policy meeting, according to Reuters.
(With files from Reuters)
Read More: Column: Gold price bulls hope short-term bank contagion sparks longer-term rally
