Prices for safe assets surged on Friday amid uncertainties in the global market, especially the banking crisis in the U.S. that led to one of its banks filing for Bankruptcy protection.
As of 11:53 BKK time on Friday, March 17, prices of Gold Spot rose 2.2% to $1,962.39 per ounce. Meanwhile, Gold Comex for April contract rose 2.18% to $1,964.90 per ounce.
Surges in gold price came as investors are avoiding risk assets, while the financial sector in the U.S. is facing problems with liquidity.
SVB Financial Group, the parent company of the collapsing Silicon Valley Bank, announced on Friday that it has filed for Chapter 11 bankruptcy protection to seek buyers for its assets, days after the turmoil in the financial market started with the failure of its state-chartered commercial banking unit.
The announcement comes as the U.S. government and regulators tried to shore up confidence in the banking sector earlier this week after the collapse of the Silicon Valley Bank. So far, the support did help boost some confidence in the stock market, but that did not last long until the incident of Credit Suisse shook the market in just a few days afterward.
As the financial sector faced difficulties from interest rates at the highest level in decades, economists are speculating that the Federal Reserve could pause its attempt to hike rates. Some economists even say that this would be the end of the Fed’s rate hike and the central bank would need to start stabilizing the financial sector.
With the possibility of rate hike shrinking, so does the bond yields and dollars. The U.S. 2-year Treasury yield dipped lower the 4% mark to 3.944% on Friday, while the 10-year Treasury yield was at 3.40%.
Meanwhile, the dollar index, an index of the value of the United States dollar relative to a basket of foreign currencies, that had been flourishing from the Fed’s rate hike edged lower to 103.89 points, nearly 9% from its previous high of 114.10 points.