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

(Reuters) – Gold prices jumped nearly 2% on Friday, driven by a slide in U.S. Treasury yields and broader financial markets as worries over a fallout in the banking sector eclipsed a strong U.S. jobs report and drove safe-haven flows into bullion.

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

U.S. 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.

(Graphic: Gold rallies amid global banking rout – )

Gold, which does not yield any interest, benefited as Treasury yields slid amid the financial market turmoil and after U.S. 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 U.S. 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 a second consecutive weekly rise.

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

Platinum firmed 1.3% to $956.95, while palladium fell 1% to $1,375.12. Both are set for weekly declines.