Gold rally ends overnight, dropping below the $2,000-an-ounce threshold early Wednesday as risk appetite grows. However, many analysts predict this is a short time out as the conflict between Russia and Ukraine continues to roil the markets. The rally’s pace also slowed as a firmer dollar and higher Treasury yields curbed the yellow metal’s advance.
Equities and cryptocurrency began a rally early in the trading day, with Dow futures leaping more than 600 points.
Gold prices had climbed to a 19-month high in Tuesday’s session and silver was at the highest level in almost nine months. Palladium, which is especially linked to Russia because the country is a major producer, also continued to surge.
Front-month gold futures rose 2.3% Tuesday to $2,043.30 an ounce on Comex and is up 3.9% in the first two days of the week. Gold gained 5.8% last month after dropping 1.8% in January, its worst month since September. It retreated 3.5% in 2021. Currently the April contract is down $54.40 (-2.66%) an ounce to $1,988.90 and the DG spot price is $1,991.60.
London’s gold market on Monday suspended all Russian refineries from its Good Delivery list, meaning that their bars can no longer trade in one of the world’s top market.
Commodity prices overall got a boost after the U.S. banned Russian oil imports Tuesday and the U.K. pledged to follow suit Wednesday.
Front-month silver futures advanced 4.6% Tuesday to $26.90 an ounce on Comex and is up 4.3% this week. Silver surged 8.8% in February after dropping 4.1% in January. It fell 12% in 2021. Silver prices are tied to industrial demand. The May contract is down currently, off $0.695 (-2.58%) an ounce to $26.200 and the DG spot price is $25.99.
Spot palladium rose 4.1% Tuesday to $3,131.50 an ounce and is up 4.4% in the first two days of this week after hitting a record high of $3,440.76 on Monday. It surged 25% last week. Russia produces about 40% of the world’s palladium, and the metal’s man use is in catalytic converters for gasoline-powered vehicles. There are already vehicle shortages and price increases for automobiles, and Russia’s Nornickel is the world’s largest supplier of palladium. The metal gained 5.3% last month after rallying 24% in January. It retreated 22% in 2021. The DG spot price has slipped below the $3,000 level, currently off $41.50 an ounce to $2,982.00.
Spot platinum gained 3.8% Tuesday to $1,165.90 an ounce and is up 4% this week. The metal advanced 1.7% in February after rising 5.7% in January. It lost 9.4% last year. The DG spot price is currently down $42.90 an ounce to $1,094.30.
Russia became increasingly isolated Tuesday as U.S. and other Western companies suspended operations there. But Moscow continued bombarding Ukraine, where millions of civilians remained trapped and talks for a ceasefire haven’t materialized.
Tuesday’s ban on imports of Russian oil sent gasoline prices at the pump skyrocketing and heightened already existing fears about inflation, already at the highest level in decades.
Federal Reserve policymakers meet next week, and Chairman Jerome Powell told a congressional panel last week that he would support a quarter-point rate increase at the March meeting.
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