Gold bounces to 1-yr high as banking sector concerns return to fore

New Delhi: Gold prices jumped 1 per cent to their highest since March last year on Monday, erasing earlier losses, as worries about the global banking sector returned to the fore despite rescue efforts by Swiss lender UBS to buy peer Credit Suisse to stabilise broader financial markets. Spot gold was up 1 per cent at $2,007.30 per ounce, as of 0747 GMT, after sliding 1 per cent earlier in the session. US gold futures climbed 2 per cent to $2,012.50. On Sunday, UBS agreed to buy Credit Suisse for $3.23 billion and assume up to $5.4 billion in losses in a deal backed by a massive Swiss guarantee. Bullion prices have rallied by 10 per cent, or about $180, on safe-haven demand after the collapse of US-based Silicon Valley Bank earlier this month, which ensnared 167-year-old lender Credit Suisse. “The risk environment is treading on a fragile state, as market participants are still not fully convinced whether recent moves by authorities can backstop further banking fallouts. Therefore, it may take much more for gold to reverse its current bullish trend,” said Yeap Jun Rong, market analyst at IG. Banks led stock markets lower on Monday as Credit Suisse’s takeover deal and promises of liquidity from central banks failed to stem fears of a bigger crisis brewing in the financial system. Meanwhile, markets now expect a 66 per cent chance of the US Federal Reserve holding rates in the current 4.50 per cent - 4.75 per cent range at this week’s meeting. “Gold prices could adopt some cautious optimism in the lead-up to the Fed meeting,” IG’s Yeap said. Considered a hedge against economic uncertainties, zero-yield gold also becomes a more attractive bet in a low-interest rate environment. Spot silver was unchanged at $22.59 per ounce, platinum fell 0.5 per cent to $970.53 and palladium lost 0.8 per cent at $1,407.70. Read all the Latest News , Trending News ,  Cricket News , Bollywood News , India News and Entertainment News here. Follow us on Facebook, Twitter and Instagram.