The crude oil prices edged higher in trading earlier in the week, after suffering the biggest weekly loss in months. At the time of this news made, Brent oil was up by 0.76 percent at $73.07 per barrel.

Meanwhile, the WTI oil prices were up by 0.91 percent at $66.83 per barrel. Over the past week, oil prices have plunged more than 10 percent due to market panic.

It is related to the banking crisis in the United States and Europe. However, market panic gradually subsided after the Swiss central bank intervened to help Credit Suisse's liquidity which was triggering the problem. 

In addition, the news of UBS's acquisition of Credit Suisse also further restored market sentiment. The deal between UBS and Credit Suisee is a historic one. 

Emergency Measurement Made by the Fed and ECB

The deal is expected to be a solution to banking problems in Europe. In addition, the Federal Reserve and the European Central Bank (ECB) are preparing emergency measures to increase market liquidity.

These institutions step is also to support banks affected by the financial crisis. The agreement of the Swiss bank and the commitment of the central bank in taking preventive measures by injecting liquidity helped restore market confidence. 

This encourages the movement of risky assets including crude oil. The analyst expect the risk-asset rally to continue if the Fed's stance softens on the outlook for rate hikes.

That opinion was said by Tina Teng, an analyst at CMC Markets. Investor attention this week has indeed been on the Fed's rate announcement, where the probability of a 25 bps rate hike has reached 60 percent. 

Raising Interest Rate Needs to be Stopped

Several Fed officials recently urged the central bank to stop raising interest rates. It is because that has been proven to cause a banking crisis just like what is happened recently. 

If the Fed later slows down the pace of interest rate hikes and makes dovish statements, oil price movements will tend to be bullish in the short term. 

Despite the Fed's stance, Goldman Sachs cut its outlook for oil prices this year. This was done due to the threat of a banking crisis and the risk of recession.

Meanwhile, Spot gold prices rocketed more than 2% to $1957.19 an ounce and are near their highest level since April 2022. Gold futures for April settlement also climbed by the same percentage to $1962.

Market Wants the Fed to Stop Raising the Rates

Elsewhere, the following XAU/USD chart shows a 2.26% gain to $1963 in Friday (March 17) night. The shock of the banking crisis is still behind the current strengthening of gold prices. 

Markets expect the Fed to think twice about raising interest rates aggressively. The Fed's FOMC meeting itself will be held next week. Gold surged amid fears of worse banking news.

They expect the Fed to delay raising rates next week, as said by Tai Wong. Tai Wong is an analyst from New York. The collapse of Silicon Valley Bank (SVB) is a phenomenon that shows the adverse effects of the Fed's interest rate hike. 

Besides that, Credit Suisse was dragged down, but Swiss financial authorities immediately addressed the problem swiftly. That keeps the ECB optimistic about raising interest rates by 50 basis points.

Gold is the Brightest Asset 

In such a situation, gold becomes the brightest asset as investors look for safe havens. This commodity bulls gained the upper hand as the US Dollar failed to rise and the stock market turned red. 

Now, the only thing that can scuttle gold's surge is the Fed's rate hike. Markets expect Federal Reserve to raise interest rates by only 25 basis points, given the struggling banks. 

The banking crisis seems to be supporting gold as it points to the general understanding is that with the current market risks and pressures in the credit sector. Meanwhile, the central bank may back down from raising interest rates. This was said by Ilya Spivak of Tastylive.