Gold hardly changed as stronger dollar counters Ukraine crisis

Bengaluru — Gold held ground on Wednesday after rising to a 19-month peak in the last session, as a stronger dollar and higher treasury yields countered support from safe-haven demand stemming from the Ukraine crisis.

Spot gold was flat at $2,053.99/oz by 3.12am GMT, after climbing to $2,069.89 in the previous session, a whisker away from its record $2,072.49 scaled in August 2020.

US gold futures rose 0.9% to $2,061.40. Apart from US and UK banning Russian oil imports which is not affecting gold much, “there seems to be a lack of further escalation in the tensions between Russia and Western powers”, said Margaret Yang, a strategist at DailyFX.

“Geopolitical catalysts are the main drivers behind gold, and once the political skies are clear, I foresee gold prices plunging quickly back to the $1,800 levels.”

US treasury yields surged as Federal Reserve chair Jerome Powell supported raising rates in March, while the dollar held firm near Monday’s high in more than one-and-a-half years.

Gold is sensitive to rising US interest rates, which increase the opportunity cost of holding non-yielding bullion. Higher rates also boost the dollar, pressuring the greenback-priced metal.

Palladium gained 3.3% to $3,284.67/oz, rising 38% since Russia invaded Ukraine on February 24. Russia is a large producer of the autocatalyst metal, used by carmakers in catalytic converters to curb emissions.

“Palladium could move much higher because [out] of all the commodities, it has the highest percentage share coming out of Russia,” said ED&F Man Capital Markets analyst Edward Meir.

“Just this week, it took out last year’s high. So, if it’s last year’s high pre-invasion, this tells me that we should be much higher post-invasion.”

Spot silver was up 1% at $26.66/oz, after touching a near nine-month high on Tuesday. Platinum rose 1.2% to $1,168.02. 

Reuters