Gold prices held above US$1,900 an ounce on Tuesday as capital continued to flow out of global stock markets amid expectations of another US bank collapse.
Share prices of Financial Republic Bank plunged by nearly 70% overnight along with declines of less than 10% for major US banks such as Well Fargo, Bank of America, Citigroup and JP Morgan as President Joe Biden failed to reassure the market about the sector's stability.
San Francisco-based Financial Republic Bank is expected to be the fourth bank to face closure, following the collapse of three US banks in less than a week.
The ongoing woes of the banking industry prompted analysts to forecast the Federal Reserve might not raise interest rates when it meets on March 22, changing from an expected 0.5% hike.
The assumption weakened the US currency as the dollar index, which measures the greenback against a basket of six major currencies, fell 0.95%, while the 10-year Treasury yield lost 3.47% on March 13.
Investors bought gold as a safe haven asset amid concerns over the state of the US banking sector.
New York gold futures closed at a five-week high on Monday, supported by a weak dollar and falling bond yields.
The COMEX (Commodity Exchange) gold contract for April delivery rose $49.30, or 2.64%, to close at $1,916.50 per ounce, the highest closing level since Feb 2.
Meanwhile Asian markets tumbled on Tuesday as investors sharply cut their exposure to bank stocks amid fears of contagion from the brewing crisis in the US.
Uncertainties over monetary policy also weighed on sentiment ahead of key US inflation data.
The MSCI Asia Pacific erased all of its gains for 2023 on Tuesday. Hitting a low of 155.44 in afternoon trade, the index has dropped more than 9% from its Feb 2 high of 171.26, marking a sharp reversal from trading early this year fuelled by optimism from China's reopening.
The Stock Exchange of Thailand plunged by 3.13% on Tuesday to close at 1,523.89 points. Shares of major banks continue to drop sharply, with Bangkok Bank (BBL) losing 2.94% to 148.50 baht and Siam Commercial Bank (SCB) falling 2.26% to 97.50 baht. Kasikornbank shed 1.17% to 126.50 baht. Other large-cap stocks, including PTT, CP All and Airports of Thailand were also dumped by investors.