Gold holds above key US$1,900 as SVB collapse fuels hopes of rate-hike pause

GOLD prices held above the key US$1,900 per ounce level on Tuesday (Mar 14) as expectations of less-aggressive Federal Reserve rate hikes after the collapse of two big US regional banks lifted non-yielding bullion’s appeal.

Spot gold was flat at US$1,913.54 per ounce, as of 0053 GMT. US gold futures were also listless at US$1,916.20.

Gold prices jumped more than 2 per cent on Monday to hit their highest since Feb 3 at US$1,914.58 despite efforts by US officials to limit the fallout from the now-shuttered Silicon Valley Bank and restore investor confidence in the banking system. Regulators had shuttered New York-based Signature Bank on Sunday.

HSBC bought the UK arm of Silicon Valley Bank for a symbolic one pound on Monday, rescuing a key lender for technology start-ups in Britain.

Markets are now largely pricing in a 25-basis-point rate hike at next week’s Fed policy meeting, with a 31.4 per cent chance of a pause in hikes.

Gold is considered a hedge against economic uncertainties, and tends to gain on expectations of lower interest rates, which reduce the opportunity cost of holding non-yielding bullion.

The US consumer price index (CPI) report for February due at 1230 GMT will be closely watched for cues on the Fed’s rate-hike plan.

The dollar index was up 0.2 per cent, making bullion more expensive for buyers holding other currencies.

SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings rose 1.31 per cent to 913.27 tonnes on Monday from 901.42 tonnes on Friday.

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Spot silver edged up 0.1 per cent to US$21.83 per ounce, platinum eased 0.1 per cent to US$995.21 and palladium was unchanged at US$1,473.33. REUTERS