Gold set for weekly gain as attacks on Ukraine lift haven demand

Gold headed for its biggest weekly gain since May, lifted by demand for haven assets as Russia escalated the conflict in Ukraine.

Prices for the precious metal climbed amid falling Treasury yields, after earlier spiking on news that Russia had attacked Europe’s largest nuclear power plant. Investors are weighing the economic fallout from Russia’s invasion of its neighbor, which is disrupting flows of energy, grains and metals. The resulting surge in oil prices has stoked concerns about global growth and inflation risks.

Investors have sought out bullion as a store of value amid the uncertainty, with inflows into exchange-traded funds backed by the metal amounting to about 34 tons so far this week, according to initial data compiled by Bloomberg. Traders are also weighing the prospects of monetary policy tightening while awaiting a key monthly US jobs report due Friday.

Federal Reserve Chair Jerome Powell reaffirmed the US central bank is on track to raise interest rates this month and start a series of hikes to curb the highest inflation in decades, though Russia’s invasion of Ukraine means it will move “carefully.”

“Given the latest remarks by Fed Chair Powell, we have no doubt that the US Fed will raise interest rates the week after next,” Daniel Briesemann, an analyst at Commerzbank AG, wrote in a note. “The labor market data are not likely to have any major impact on the gold price this time.”

Spot gold traded up 0.4% to $1 943.77 an ounce at 10:32 a.m. in London, after earlier rising as much as 0.8%. Prices are on track for a 3% gain this week.

Palladium rose 0.8%, bringing this week’s gain to about 19%, on concerns over potential supply disruptions as Russia produces about 40% of the metal mined globally. Silver and platinum gained.

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