Spot gold prices rocketed by more than 2% to $1,957.19 an ounce to their highest level since April 2022. Gold futures for April settlement also climbed by the same percentage to $1,962. 

The XAU/USD rose by 2.26% to $19,963 in Friday (March 17) trading evening. The shock of the banking crisis is still the background for the strengthening of gold prices at the end of this week. 

Markets expect the Fed to think twice about raising interest rates aggressively. The Fed's FOMC meeting itself will be held next week where people await for it’s decisions. 

Goldd jumped on fears of worse banking news later this week. They expect the Fed to pause its rate hikes next week. This was said by Tai Wong, an analyst from New York. 

ECB Continues It’s 50 BP Rate Hike

The collapse of Silicon Valley Bank (SVB) became a phenomenon that showed the adverse effects of the Fed's interest rate hike. Credit Suisse was dragged along as well. 

However, the Swiss financial authorities were quick to help where it can help to calm down the market. Even so, the ECB continues to raise interest rates by 50 basis points.

In such a situation, gold becomes the brightest asset because investors are looking 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 rising interest rates. Markets expect the Fed to raise interest rates by only 25 basis points given the struggling banks. 

Tightening Financial Condition won’t Boost the Palladium 

The banking crisis seems to be supporting gold as it points too. The general understanding is that with the current market risks and pressures in the credit sector, the central bank may back down To raise interest rates.

It was said by Ilya Spivak analyst at Tastylive. Although gold has the upper hand, palladium is not. The metal fell by 2.2% to $1,399.77. 

According to Tai Wong, tightening financial conditions will be difficult to boost palladium given its function as an industrial metal. Elsewhere, several news restored market confidence that had collapsed.

It was especially due to the Silicon Valley Bank and Credit Suisse crisis in recent days. Sentiment is also improving following the ECB's decision to keep raising interest rates by 50 basis points yesterday. 

Euro Responds the ECB rate Hike Positively 

The EUR/USD strengthened to the range of 1.0665 in today's trading. The euro responded positively to the ECB's interest rate decision yesterday, although some market participants chose to "wait-and-see".

That is especially ahead of the release of Eurozone inflation data today. The eurozone banking sector remains in pretty solid shape as said by Nick Bennenbroek.

Nick is an international economist at Wells Fargo. If market tensions ease and volatility recedes in the weeks and months ahead, the analysts think persistent inflation should be sufficient to prompt further tightening.

This improvement in sentiment does not necessarily mean that all anxiety has disappeared. Market participants still think that they need to be careful in taking the further actions. 

EUR/JPY Stuck in 141.70s Range

The USD/JPY yesteday weakened in the 132.90s. It means that this pair was still within the one-month low it has inhabited since the Silicon Valley Bank crisis emerged. 

The EUR/JPY was also stuck in the 141.70s range. Some analysts think the situation of the two currency pairs indicates that some market participants are still worried about the threat of a wider banking crisi. 

It is especially in the United States and Europe. Some experts highlight that many smaller banks have weaker capital resilience. They are not among the banking groups that are "too big to fail". That is why; they are likely to file for bankruptcy or go into liquidation without adequate bailouts.