Spot gold was up 0.5% at $1,928.08 per ounce, as of 0313 GMT. U.S. gold futures rose 0.5% to $1,932.10.
Bullion prices have risen about 3.2% so far in the week, heading for a third consecutive weekly gain, lifted by safe-haven demand after the collapse of Silicon Valley Bank (SVB), the largest bank failure since the 2008 financial crisis.
Large U.S. banks injected $30 billion in deposits into First Republic Bank on Thursday to rescue the lender caught up in a widening banking crisis. This came after Swiss lender Credit Suisse said it would borrow up to $54 billion from the Swiss National Bank to shore up liquidity.
The banking crisis seemed supportive for gold "because it led to... the general sense that with this market risk and with credit stress, central banks might back off (on hiking rates)," said Ilya Spivak, head of global macro at Tastylive.
But the European Central Bank (ECB) raised interest rates by 50 basis points on Thursday, as concerns over high inflation outstripped fears of a global banking crisis.
U.S. central bankers are seen pressing on with their inflation-fighting campaign with a 25 basis-point rate hike at the March policy meeting.
The opportunity cost of holding non-yielding bullion rises when interest rates are increased to bring down inflation.
The focus is on "whether the Fed can manage what the ECB just did, which is to stay in the inflation fight without triggering some sort of a market shakeout," said Tastylive's Spivak.
The dollar index was down 0.2%, making gold more attractive to buyers holding other currencies. [USD/]
Spot silver rose 0.9% to 21.89 per ounce, platinum added 0.8% at $980.33 and palladium climbed 0.9% to $1,443.80.
All three metals were bound for weekly gains, with silver set for its best week since early December.
(Reporting by Kavya Guduru in Bengaluru; Editing by Sonali Paul and Subhranshu Sahu)
By Kavya Guduru
