Gold prices surged Friday as a wave of banking crises shook markets in bullion's biggest weekly rise in four months, while bets solidified for a less aggressive U.S. Federal Reserve in its fight against inflation.
Spot gold climbed 3.1% to $1,977.89 per ounce, its highest level since April 2022. Bullion has risen about 5.8% this week. U.S. gold futures gained 2.6% to settle at $1,973.50.
"Gold is surging on fears that more bad banking news could appear over the weekend and hopes that the Fed will pause its rate hikes next week," Tai Wong, an independent metals trader based in New York, said.
The collapse of Silicon Valley Bank in the U.S. has highlighted banks' vulnerabilities to sharply higher rates, while a rout in Credit Suisse shares has added to market turmoil.
"Gold is likely to shine through the chaos as investors adopt a guarded stance," said Lukman Otunuga, senior research analyst at FXTM.
The dollar and stock markets slid, making bullion a more attractive investment. While it is considered a hedge against economic uncertainties, gold's opportunity cost rises when interest rates are increased.
The Fed will raise interest rates by 25 basis points on March 22 despite recent banking sector turmoil, according to a strong majority of economists polled by Reuters who were divided on the risks to their terminal rate view.