Gold pushed by bank fears

Gold rebounded on Friday, rising 1% and recovering some of its losses from earlier in the week. Concerns about the stability of the banking sector contributed to the rally, while traders reduced their expectations for another interest rate hike following comments made by the chairman of the US Federal Reserve.

At 12:30 p.m. ET (1830 GMT), spot gold was up 1.2% at $1,981.79 per ounce, while US gold futures settled 1.1% higher at $1,981.60.

The market response to remarks by Treasury Secretary Janet Yellen had a greater impact on gold than the cautious comments made by Powell, suggesting that the upcoming June meeting of the Federal Reserve may not result in an interest rate hike unless there are significant concerns arising from economic data in the coming weeks, according to independent metals trader Tai Wong.

Shares of US regional lenders declined following a CNN report stating that Yellen had informed bank CEOs about the potential need for more mergers due to recent bank failures. Bank jitters ahead of the weekend tend to unsettle the market.

Fed Chair Jerome Powell expressed uncertainty about the necessity of further interest rate increases, as central bank officials weigh the impact of previous hikes on borrowing costs. Market expectations now indicate an 82% chance of the Fed maintaining rates until July.

Gold had experienced its worst week since February, declining around 1.5%, as a result of robust economic data and optimism surrounding the debt ceiling. In addition, some hawkish remarks from the Fed contributed to the downward pressure on gold prices, according to senior market analyst Edward Moya from OANDA.

Silver rose 1.7% to $23.90 per ounce, platinum increased by 1.4% to $1,064.09, and palladium saw a significant jump of 3.8% to $1,508.57.