Gold prices end 2.6% higher on SVB chaos

Gold prices rose steeply at the close of trading today, March 13, as investors continued to assess the aftermath of Silicon Valley Bank's (SVB) bailout — the largest US bank collapse since the 2008 financial crisis.

This historic collapse pushed traders to pump safe-haven flows into bullion, treasuries and the Japanese yen. This is despite attempts by US regulators to contain the damage from the tech-focused bank’s fallout.

The yellow metal benefited from the financial markets’ increased bets that the Federal Reserve will reduce the size of its interest rate hikes in response to the SVB failure. Further, CME Group's FedWatch tool showed that the possibility of a 50-basis-point rise at the upcoming March 21-22 meeting fell to zero, with a 28% chance that rates would remain unchanged.

The yield on two-year US Treasury bonds is poised to record its biggest daily decline since 2008, with investors anticipating the Fed's shift to ease monetary policy later this year.

In terms of trading, gold for April delivery jumped 2.60%, or $49.30, to end at $1,916.50 an ounce.

Meanwhile, the US dollar index, which gauges the greenback's strength against a basket of six currencies, contracted by 1% to 103.57 points at 9:07 pm Makkah time.