Gold Rally Cools But Sticks Near $1,900

Gold rally cools but sticks near $1,900

Gold rally cools but sticks near $1,900 an ounce as risk appetite starts to fight with fears over mounting tensions between Russia, Ukraine and western powers. Higher U.S. Treasury yields curbed also challenging the yellow metal.

U.S. President Joe Biden said Tuesday that “the beginning of a Russian invasion” of Ukraine is occurring, just before revealing sanctions against Russian banks and elites. The U.K. and the E.U. unveiled similar measures Tuesday, while Germany halted a major gas pipeline from Russia. Russian President Vladimir Putin recognized two separatist regions in Ukraine on Monday and said he would deploy “peacekeeping” forces there.

Gold strengthened Tuesday as the yellow metal resumed its historic role as a hedge against geopolitical uncertainty. But higher Treasury yields — following hawkish signals from Federal Reserve officials — put pressure on prices Wednesday.

Front-month gold futures rose 0.4% Tuesday to $1,907.40 an ounce on Comex after climbing 3.1% last week. Comex gold didn’t post a settlement price Monday because of the Presidents Day holiday in the U.S. that closed the government and financial markets. Gold dropped 1.8% in January, its worst month since September. It retreated 3.5% in 2021. Currently, the April contract is down $4.70 (-0.25%) an ounce to $1,902.70 and the DG spot price is $1,901.80.

The Standard & Poor’s 500 Index fell into a correction Tuesday — down 10% from its January peak — as investors assessed the risk from the Ukraine situation and investors flocked to havens such as gold.

Biden said Tuesday that the U.S. was moving additional troops and equipment to strengthen its allies on NATO’s eastern flank, though he said they wouldn’t be there to “fight Russia.” U.S. Secretary of State Antony Blinken called off a meeting later this week with Russian Foreign Minister Sergey Lavrov intended to help defuse the situation

But anticipation of a series of Federal Reserve interest rate hikes beginning in March has curbed gold’s upward trajectory. Rate increases are bearish for gold — making the precious metal less attractive an investment — though the high inflation that’s spurring the action is itself bullish for gold. U.S. inflation posted the biggest year-on-year jump in about four decades in January.

Investors will be closely following comments Thursday from Fed officials Loretta Mester and Raphael Bostic as well as economic data on U.S. new home sales, GDP and initial jobless claims. Friday brings data on U.S. consumer income and durable goods and the University of Michigan consumer sentiment report.

Front-month silver futures increased 1.3% Tuesday to $24.36 an ounce on Comex, adding to last week’s 2.6% rally. Silver dropped 4.1% in January after gaining 2.4% in December. It fell 12% in 2021. Silver prices are tied to industrial demand. The May contract is currently slightly down $0.031 (-0.13%) an ounce to $24.325 and the DG spot price is $24.30.

Spot palladium rose 1.2% Tuesday to $2,381.00 an ounce, extending last week’s 6.2% gain. Palladium jumped 24% last month after rallying 9.6% in December. It retreated 22% in 2021. Palladium’s main use is in catalytic converters for gasoline-powered vehicles. Currently, the DG spot price has jumped up $46.20 an ounce to $2,433.00 as concerns over tensions with Russia, the leading global producer of Palladium in recent years, continue to mount.

Spot platinum added 0.9% Tuesday to $1,090.60 an ounce. It advanced 5.2% last week. The metal rose 5.7% in January after gaining 2.9% in December. It lost 9.4% last year. The current DG spot price has tipped up $1.40 an ounce to $1,091.30.


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