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Gold prices highest in more than 5 weeks as Russia-Ukraine war feeds inflation

Gold Pic Gold futures rose Monday as U.S. traders returned from a three-day weekend

Tue, 19 Apr 2022 Source: classfmonline.com

Gold futures rose Monday as U.S. traders returned from a three-day weekend, with little prospect for a quick end to Russia’s invasion of Ukraine insight contributing to global inflation, supporting haven demand for the precious metal, and lifting prices to their highest finish in more than five weeks.

“Gold directly benefits from the Russia-Ukraine conflict inflation effects, which are now more meaningful than direct military developments, in a market sense,” said Stephen Innes, managing partner at SPI Asset Management, on a daily note. “These consequences have fabricated a hyperinflationary environment that sees gold investors stocking up on paper and [the physical metal] for the eventual procession to recession,” he added.

Gold for June delivery GC00, -0.25% GCM22, -0.25% climbed $11.50, or 0.6%, to settle at $1,986.40 an ounce on Comex, after touching a high at $2,003. The settlement was the highest for a most-active contract since March 10, when prices ended at a roughly 19-month high of $2,000.40, according to Dow Jones Market Data. Prices rose 1.5% for last week’s holiday-shortened week.

May silver SIK22, -0.25% rose 45 cents, or nearly 1.8%, at $26.15 an ounce, after last week’s 3.5% gain. U.S. markets were closed on Good Friday.

Apparent Russian missile attacks rocked the western Ukraine city of Lviv Monday, killing at least six, as the country prepared for an all-out Russian assault on eastern Ukraine. Ukrainian troops were holding out in the southeastern port city of Mariupol, which has been largely destroyed, after rejecting Russian demands to surrender.

“Ukraine is the reason for the gold-price rise,” Chintan Karnani, director of research at Insignia Consultants, told MarketWatch. Inflation will be around longer if the Ukraine conflict continues to escalate, he said. Gold is often seen as a hedge against inflation.

Today trading volumes were thin as the U.K. and most of Europe and parts of Asia were closed due to Easter Monday, he said.

On a technical trading level, gold prices, meanwhile, have to top $2,000 on Tuesday and the rest of the week in order to “start another wave” of rising prices, said Karnani.

Gold has rallied on apparent haven demand even as yields on Treasurys have risen and the U.S. dollar has strengthened both typically seen as negatives for the precious metal.

“Either safe-haven demand has nullified these negative forces or some central bank is acting like a whale, using this opportunity to load up on bullion,” said Marios Hadjikyriacos, senior investment analyst at XM, in a note. “The crippling sanctions on the Russian central bank made it clear that FX reserves are not as solid as gold in a crisis.”

In other Comex metals trading Monday, May copper HGK22, -1.17% tacked on 1.7% to $4.802 a pound. July platinum PLN22, -0.06% rose about 2.7% to $1,020.50 an ounce and June palladium PAM22, -1.50% settled at $2,445.10 an ounce, up 3.8%.

Source: classfmonline.com