“A lot of investors are looking to the precious metal space as a safe haven against this volatility and this risk … amid a much lower interest rate environment, and the US dollar that’s dropping,” which is lifting their prices, Melek said.
Traders no longer expect a rate hike of 50 basis points by the Federal Reserve next week and the current projection is for a 25-basis-point move, with some even expecting no hike at all, making silver more attractive as it doesn’t yield any interest.
Spot gold also rose 1.5% to $1,905.82 per ounce by 12:15 p.m. New York time, its highest level in a month. US gold futures also shot up 2.3% to $1,911.70 per ounce.
“The future of gold prices largely depends on whether the Fed’s measures prove effective. If the Silicon Valley Bank’s (SVB) bankruptcy is deemed an isolated incident, gold may lose some of its recent gains,” said Alexander Zumpfe, a precious metals dealer at Heraeus.
(With files from Reuters)