Gold rallies on safe-haven allure as banking rout grips markets

GOLD prices jumped nearly 2 per cent on Friday (Mar 10), driven by a slide in US Treasury yields and broader financial markets as worries over a fallout in the banking sector eclipsed a strong US jobs report and drove safe-haven flows into bullion.

Spot gold was up 1.8 per cent at US$1,863.46 per ounce by 2:26 pm ET (1926 GMT), its highest since Feb 14. US gold futures also rose 1.8 per cent to settle at US$1,867.20 per ounce.

US tech lender SVB’s troubles rippled through global markets and hit banking stocks, shoring up interest in bullion often seen as a safe store of value during uncertain times.

“I think the main focal point is yields and with yields dropping today, that is a boost for the gold market,” said David Meger, director of metals trading at High Ridge Futures.

Gold, which does not yield any interest, benefited as Treasury yields slid amid the financial market turmoil and after US jobs data showed hourly earnings rose by less than expected last month. That gave hope that the Fed can be less aggressive in its path of interest rate hikes, even though job creation was strong.

“As the marketplace sees it, the wages component of the US jobs report was tamer than expected, which has apparently mitigated the higher-than-expected rise in non-farm payrolls,” wrote Jim Wyckoff, senior analyst at Kitco Metals in a daily note.

“There is keener risk aversion in the marketplace to end the trading week, and that is likely prompting some safe-haven demand for gold and silver.”

Gold prices are en route to a second consecutive weekly rise.

Spot silver gained 1.9 per cent to US$20.445 an ounce, but remained on track for a weekly fall of 3.7 per cent.

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