Gold Hits One-Month High on Ukraine

Gold Hits One-Month High on Ukraine

Gold hits a one-month high early Monday on the escalating conflict in Ukraine which is driving extreme geopolitical concerns and attracting haven demand.

Risk-off investors are turning to the yellow metal as a hedge against geopolitical uncertainty as Russian forces were on the cusp of capturing the embattled Ukrainian port city of Mariupol. Rebels have rejected demands for surrender.

The geopolitical focus shifted attention from U.S. inflation and monetary policy. The Federal Reserve is widely expected to resume accelerated interest rate hikes this year after an inflation report last week showed consumer prices increased by the most in 16.5 years in March. Gold is a traditional hedge against inflation, but rate hikes are considered bearish.

Front-month gold futures rose 1.5% last week to settle at $1,974.90 an ounce on Comex. The June contract decreased 0.5% Thursday. Financial markets were closed Friday for the Good Friday holiday, and many European and other markets remained closed for Easter Monday. Gold advanced 2.8% in March after gaining 5.8% in February. It gained 6.9% in the first quarter and retreated 3.5% in 2021. The June contract is up $22.00 (+1.11%) an ounce to $1,996.90 and the DG spot price is $1,992.40.

Russia was bombarding cities across Ukraine on Monday, days after the sinking of a Russian warship.

In addition to the Ukraine conflict, gold got a boost from ongoing lockdowns in Shanghai that are expected to curb economic growth. But China’s economy expanded 4.8% year on year in the first quarter, according to data released Monday. That was a faster pace than the 4.4% than analysts had expected.

Investors will be closely examining comments from many central bank officials this week for further indications on the direction of monetary policy. They include St. Louis Fed President James Bullard on Monday; Chicago Fed President Charles Evans and Minneapolis Fed President Neel Kashkari on Tuesday; San Francisco Fed President Mary Daly, Evans, and Atlanta Fed President Raphael Bostic on Wednesday; and Bullard and on Thursday.

Fed Chairman Jerome Powell and European Central Bank President Christine Lagarde are scheduled to discuss the global economy Thursday at the spring meeting of the International Monetary Fund/World Bank, which begins Monday.

In other economic news, March data on U.S. housing starts comes out Tuesday, existing home sales and the Beige Book on Wednesday, weekly jobless claims and the March index of U.S. leading economic indicators on Thursday, and April manufacturing PMI Friday.

U.S. inflation jumped 8.5% in March, compared with a year earlier, to taking it to the fastest pace in more than 40 years, according last week’s data from the Labor Department. Inflation also increased 1.2% in March from February.

Front-month silver futures increased 3.9% last week to settle at $25.79 an ounce on Comex, though the July futures contract retreated 1.3% Thursday. Silver gained 3.1% in March after surging 8.8% in February. It rose 7.6% in the first quarter after falling 12% in 2021. Silver prices are tied to industrial demand. The May contract is up $0.600 (+2.33%) an ounce to $26.300 and the DG spot price is $26.09.

Spot palladium fell 1.7% last week to $2,386.50 an ounce, though it increased 1.2% Thursday. Palladium touched a record $3,440.76 in March. Russia produces about 40% of the world’s palladium, and Russia’s Nornickel is the world’s largest supplier of palladium. The metal dropped 8.5% in March after gaining 5.3% in February. It gained 20% in the first quarter and retreated 22% in 2021. The DG spot is solidly up $41.60 an ounce to $2,442.00.

Spot platinum rallied 1.7% last week to $999.60 an ounce after rising 0.2% Thursday. The metal retreated 4.2% in March after advancing 1.7% in February. It increased 2.9% in the first quarter after dropping 9.4% last year. Currently, the DG spot price is up $26.50 to $1,029.70.


Disclaimer: This editorial has been prepared by Dillon Gage Metals for information and thought-provoking purposes only and does not purport to predict or forecast actual results. This editorial opinion is not to be construed as investment advice or as a recommendation regarding any particular security, commodity or course of action. Opinions expressed herein cannot be attributable to Dillon Gage. Reasonable people may disagree about the events discussed or opinions expressed herein. In the event any of the assumptions used herein do not come to fruition, results are likely to vary substantially. It is not a solicitation or advice to make any exchange in commodities, securities or other financial instruments. No part of this editorial may be reproduced in any manner, in whole or in part, without the prior written permission of Dillon Gage Metals. Dillon Gage Metals shall not have any liability for any damages of any kind whatsoever relating to this editorial. You should consult your advisers with respect to these areas. By posting this editorial, you acknowledge, understand and accept this disclaimer.