Gold kept rising in Asia — after jumping 2% on Friday — as investors flocked to havens following the collapse of a US bank, while base metals also gained amid increasing bets that the Federal Reserve will scale back interest-rate hikes.
(Bloomberg) — Gold kept rising in Asia — after jumping 2% on Friday — as investors flocked to havens following the collapse of a US bank, while base metals also gained amid increasing bets that the Federal Reserve will scale back interest-rate hikes.
The failure of Silicon Valley Bank — the second-largest collapse of an American lender in history — has spurred nervousness about potential spillover effects across the financial system and prompted US officials to move to protect depositors’ funds on Sunday.
Bullion climbed to a one-month high and base metals pushed higher as the dollar and Treasury yields slumped on speculation the Fed will slow the pace of interest-rate hikes. Economists at Goldman Sachs Group Inc. no longer expect an increase from the central bank at its March meeting, given stresses in the banking system.
“The bankruptcy of the Silicon Valley Bank in the US on Friday triggered panic in the market, which not only aggravated risk aversion, but also greatly lowered the market’s expectations for interest-rate hikes,” Jinrui Futures Co. wrote in a note.
US data released late last week painted a mixed picture of the economy as the Federal Reserve mulls picking up the pace of interest-rate hikes. Inflation figures due Tuesday may also weigh in determining the central bank’s next move.
Spot gold rose 0.9% to $1,885.57 an ounce as of 11:06 a.m. in Singapore. It has climbed more than 3% since Wednesday’s close as concern over SVB grew. The Bloomberg Dollar Spot Index declined 0.9% following a 0.4% drop on Friday.
Copper jumped 0.8% and aluminum added 0.2%, while zinc rose 0.5% from its lowest close since November. Silver climbed 1.3% and palladium soared 2.9%.
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