Gold prices rise as global banking crisis spurs safe-haven demand

GOLD prices edged higher on Thursday (Mar 16) as troubles at Swiss lender Credit Suisse renewed fears of a banking crisis worldwide and steered traders towards the safe-haven metal.

Spot gold was up 0.1 per cent at US$1,919.86 per ounce, as of 0050 GMT, after rising more than 1 per cent on Wednesday. US gold futures fell 0.2 per cent to US$1,927.80.

Shares of Credit Suisse slumped by as much as 30 per cent on Wednesday after the lender’s largest shareholder said it could not provide further support, prompting the chief executive officer to make new assurances on its financial strength.

Swiss regulators pledged a liquidity lifeline to Credit Suisse in an unprecedented move by a central bank.

Data on Wednesday showed US retail sales fell 0.4 per cent in February as purchases of motor vehicles and other goods slumped.

Separate data showed US producer prices unexpectedly fell 0.1 per cent in February.

Markets now see a 51.1 per cent chance of rates being held at current levels at the US Federal Reserve’s March meeting.

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 dollar index eased 0.1 per cent, making bullion less expensive for buyers holding other currencies. US benchmark 10-year Treasury yields were lower.

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Spot silver rose 0.2 per cent to US$21.84 per ounce, platinum was 0.1 per cent higher at US$962.96 and palladium gained 1.4 per cent at US$1,467.90. REUTERS