By Ashitha Shivaprasad
March 13 (Reuters) – Gold approached the $1,900 level on Monday as investors sought refuge from uncertainty caused by the collapse of Silicon Valley Bank, but were buoyed by bets that the Federal Reserve could be forced to moderate its rate hikes.
Spot gold rose 0.9% to $1,885.37 an ounce at 0904 GMT. At the start of the session, prices hit their highest since early February at $1,893.96. US gold futures rose 1.2% to $1,889.50.
* Gold gained 2% on Friday after Silicon Valley Bank (SVB) was shut down by California regulators. Regulators also closed New York-based Signature Bank on Sunday.
* “Recent events show that gold remains a safe-haven asset as it can benefit from market uncertainty. Additionally, market participants’ rejection of rate hike expectations is boosting gold,” said Giovanni Staunovo, analyst at UBS.
* Lower interest rates reduce the opportunity cost of holding gold, which does not earn interest.
* Following the collapse of the SVB, traders now expect the Federal Reserve not to raise interest rates by 50 basis points this month, contrary to the 70% probability that existed before the event. Rate cuts are also planned by the end of 2023.
* Goldman Sachs said on Sunday it no longer expects the Federal Reserve to raise rates at its March 22 meeting.
* Gold was helped by the concurrent decline in the dollar index, making bullion cheaper for overseas buyers.
* In the meantime, the American authorities announced a series of measures to deal with the financial consequences of the bankruptcy of the SVB, but the stock market continued to sell off on European markets.
* Among other precious metals, silver rose 1.4% to $20.80 an ounce, platinum 0.7% to $966.29 and palladium 1.1% to 1,393, $38.
(Reporting by Ashitha Shivaprasad in Bengaluru; Editing in Spanish by Ricardo Figueroa)