Gold price rises above $2 000 as war in Ukraine boosts haven demand

As investors weigh the geopolitical and economic fallout from Russia’s invasion of Ukraine.
Image: Chris Ratcliffe/Bloomberg

Gold surged above $2 000 an ounce on growing demand for haven assets as investors weigh the geopolitical and economic fallout from Russia’s invasion of Ukraine.

Bullion is extending gains after posting its biggest weekly advance since July 2020 amid mounting concerns that the raft of penalties against Russia could dim global growth and further stoke inflation. Disruptions to supplies of grain, energy and metals are adding to price pressures, at a time when the Federal Reserve is preparing to raise interest rates.

“The move to safety in the face of significantly rising energy and food prices should continue to support gold for some time,” said Shyam Devani, a technical strategist and founder of SAV Markets in Singapore. The inability to tackle the inflation problem in today’s environment could see prices climb to $2 142 an ounce, he said.

President Vladimir Putin said again on Sunday the war will continue until Ukraine accepts his demands and halts resistance, dimming hopes for a negotiated settlement. Meanwhile, US Secretary of State Antony Blinken said the Biden administration and its allies are discussing an embargo of Russian oil, raising fears of an inflation shock as the prices of Brent crude soared.

Investors are seeking out gold as a store of value. Inflows into bullion-backed exchange-traded funds amounted to 41.9 tons last week, the most since July 2020, according to initial data compiled by Bloomberg. This brought holdings to the highest level in almost a year.

“The move to safety in the face of significantly rising energy and food prices should continue to support gold for some time,” said Shyam Devani, a technical strategist and founder of SAV Markets in Singapore. The inability to tackle the inflation problem in today’s environment could see prices climb to $2 142 an ounce, he said.

Gold futures for April delivery rose as much as 2% to $2 005.20 an ounce, before trading at $1 990.80 on the Comex at 11:36 a.m. Singapore time. This was the highest intraday level since August 2020, the month it hit a record of $2 089.20. Prices climbed 4.2% last week.

Palladium surged to an all-time high on concerns over supply risks, and silver and platinum also gained.

© 2022 Bloomberg

COMMENTS   0

You must be signed in and an Insider Gold subscriber to comment.

SUBSCRIBE NOW SIGN IN

LATEST CURRENCIES  

USD / ZAR
GBP / ZAR
EUR / ZAR
BTC / USD

SEARCH COMPANIES
Enter company name or share code:

ECONOMIC DATA  

  CPIThe Consumer Price Index (CPI) measures monthly changes in prices for a range of consumer products Apr 2022 5.90%
  CPI ex OERThe Consumer Price Index excluding Owners’ Equivalent Rent (CPI ex OER) measures monthly changes in prices for a range of consumer products excluding Owners’ equivalent rent that measures changes in the cost of owner-occupied housing Apr 2022 6.40%
  RepoThe rate at which the Reserve Bank lends money to the country’s commercial banks and set by the Reserve Bank’s Monetary Policy Committee. May 2022 4.25%
  Prime lendingThe Prime Lending Rate is the rate of interest that commercial banks will charge their clients when issuing a loan (home loan or vehicle finance) May 2022 7.75%

Instrument Details  

You do not have any portfolios, please create one here.
You do not have an alert portfolio, please create one here.
INSIDER SUBSCRIPTION APP VIDEOS RADIO / LISTEN LIVE SHOP OFFERS WEBINARS NEWSLETTERS TRENDING

Follow us:

Search Articles:
Click a Company: