Gold headed for its biggest weekly advance since the middle of March as renewed worries about the US banking sector fueled bets that the Federal Reserve may have to cut rates sooner than anticipated.
Bullion was steady on Friday, and is up around 3% this week. It has surged since early March on falling Treasury yields, and nervousness over banks and the US debt ceiling standoff. Gold climbed to a one-year peak on Thursday and is within reach of the record high set in 2020.
The main focus at the moment is the deepening rout in US regional banks and what that means for interest rates. There are expectations the Fed may have to start cutting borrowing costs by July in response to the tightening credit conditions. Lower rates are supportive for the precious metal, which doesn’t offer any interest.
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