Gold and palladium rally early Monday on Ukrainian news. Headlines from the invasion worsened over the weekend, with Western powers imposing new sanctions on Russia and Russian President Vladimir Putin putting Russia’s nuclear force on high alert.
Investors turned to gold as a haven against uncertainty. Monday’s rally sent the yellow metal back solidly above $1,900 an ounce to near the highest level in more than a year, erasing most of Friday’s decline.
Over the weekend, the U.S. and its allies took steps to block Russian banks from accessing the SWIFT system for international payments. The move is seen as disruptive to Russian exports, including of commodities. Russia’s Nornickle is the world’s largest supplier of palladium, Reuters reported.
Front-month gold futures fell 0.6% last week to $1,887.60 an ounce on Comex after tumbling 2% Friday and erasing all of the week’s gain to that point. It settled at the highest level in 13 months on Thursday. Gold is up 5.1% this month after dropping 1.8% in January, its worst month since September. It retreated 3.5% in 2021. The April contract is currently up $29.10 (+1.54%) an ounce to $1,916.70 and the DG spot price is $1,917.00.
Spot palladium rose 1.8% last week to $2,394.00 an ounce, though it tumbled 5.4% Friday. Palladium is up 0.7% this month after rallying 24% in January. It retreated 22% in 2021. Palladium’s main use is in catalytic converters for gasoline-powered vehicles. Currently, the DG spot price is up $144.30 an ounce to $2,527.00.
The prospect of further supply-chain issues also bolstered gold, which is a traditional hedge against inflation, already at the highest level in decades. Investors continued to watch comments from Federal Reserve officials about an expected interest-rate hike in March to rein in the high costs of goods and services. High inflation is bullish for gold, though rate increases are bearish.
Investors will be watching this week for President Joe Biden’s State of the Union address on Tuesday and Fed Chairman Jerome Powell’s testimony before Congress on monetary policy on Wednesday and Thursday. There are also a series of key economic releases scheduled, including first-of-the-month manufacturing data from the U.S. and other major economies, plus U.S. jobs reports at the end of the week.
A report Friday showed U.S. consumer spending advanced more than expected in January, and the personal consumption expenditures price index, which the Fed uses to track inflation, rose the most year-on-year since 1982.
Front-month silver futures slipped 0.1% last week to $24.02 an ounce on Comex after tumbling 2.8% Friday. Silver is up 7.3% in February after dropping 4.1% in January. It fell 12% in 2021. Silver prices are tied to industrial demand. The May contract is currently up $0.628 (+2.61%) an ounce to $24.645 and the DG spot price is $24.55.
Spot platinum fell 2% last week to $1,058.60 an ounce after dropping 0.3% Friday. The metal is up 2.9% in February after rising 5.7% in January. It lost 9.4% last year. The DG spot price is up $7.20 an ounce to $1,062.50.
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