A massive surge! The tense Russia-Ukraine situation stimulates safe-haven demand, sending gold soaring by over $30 to a high of $1865
On Friday, February 11, gold prices surged to a near two-month high at 1861.28 (+23.88, +1.30%), driven by concerns over soaring inflation and escalating tensions between Russia and Ukraine, boosting demand for the safe-haven metal.
Time:
2022-02-12 10:14
Friday (February 11), Gold price (1861.28, 23.88, 1.30% ) surged to a near two-month high, as concerns about soaring inflation and escalating tensions between Russia and Ukraine boosted demand for the safe-haven metal.
Spot gold closed at $1858.85 an ounce in late US trading, up sharply by $32.34 or 1.77%, hitting a high of $1865.37 an ounce and a low of $1820.70 an ounce during the day. This week, spot gold rose $51.08 or 2.83%.
COMEX gold futures closed up 0.18% at $1840.80 an ounce.
In addition to gold, other precious metals also rose: spot Silver (23.61, 0.09, 0.38% ) rose 1.60% to close at $23.555 an ounce; platinum rose 0.13% to $1029.18 an ounce; and palladium rose 2.15% to $2308.50 an ounce.
US National Security Advisor Jake Sullivan said Friday that Russia could attack Ukraine at any time, and that it could begin with air strikes.
"Any American in Ukraine should leave as soon as possible, no matter what, within the next 24 to 48 hours," Sullivan, the national security advisor to President Biden, said at a news conference.
Sullivan noted that the US is unsure whether Russian President Vladimir Putin has made a final decision to invade Ukraine. But "it could happen very soon," he said.
According to the latest report by PBS NewsHour's chief Washington correspondent, three officials said the US believes Russian President Vladimir Putin has decided to invade Ukraine and has communicated those plans to the Russian military.
He wrote on Twitter: "Two administration officials said they expect the invasion to begin next week, echoing comments from Secretary of State Antony Blinken."
He also noted that US defense officials expect a horrific and bloody battle to begin with two days of bombing and electronic warfare, followed by an invasion, possibly aimed at regime change. The North Atlantic Council was briefed on this new intelligence today.
US-based Maxar Technologies has been tracking the buildup of Russian troops. The company said photos taken Wednesday and Thursday showed a large deployment of troops, vehicles and warplanes in western Russia, Belarus and Crimea (Russia annexed Crimea from Ukraine in 2014).
“Gold is seeing some safe-haven inflows as we face geopolitical risks and concerns that rising interest rates will impact global economic growth,” said Chris Gaffney, president of global markets at TIAA Bank.
Gold is considered a hedge against soaring inflation, and is often used as a safe store of value during times of political and financial turmoil.
The escalating tensions in Ukraine have exacerbated the sell-off in Wall Street stocks. US stocks also fell sharply in the previous trading day, as data showed that the US Consumer Price Index (CPI) recorded its largest annual increase in 40 years, increasing pressure on the Federal Reserve to raise interest rates sharply.
The Fed funds futures market expects the Fed to raise interest rates by 50 basis points at its policy meeting next month.
St. Louis Fed President James Bullard said Thursday that he would like to see a full percentage point increase in interest rates over the next three policy meetings.
“Gold is starting to regain its footing as some investors are seeking safe havens in case the Fed’s overly aggressive tightening cycle threatens economic growth,” said Edward Moya, senior market analyst at brokerage firm OANDA.
“If there is a troop movement (by Russia), gold could rally above $1900.”
Future Outlook
1. This week, 15 Wall Street analysts participated in Kitco's gold survey. Among the participants, 6 analysts (40%) expect gold prices to rise next week. Meanwhile, 4 analysts (27%) expect gold prices to fall next week. Another 5 analysts (33%) are neutral on the near-term outlook for gold.
Meanwhile, an online poll of retail investors received a total of 597 votes. Of these respondents, 373 (62%) believe gold prices will rise next week. Another 128 (21%) believe gold prices will fall, while 96 (16%) expect a flat outlook in the near term.
2. Equiti Capital market analyst David Madden said he is slightly bullish on gold, as stock market volatility supports the "movement of funds to quality assets." However, he added that he does not believe gold will break through $1850 substantially soon, as the upcoming Fed rate hike supports the dollar's trend.
3. Sean Lusk, co-head of commercial hedging at Walsh Trading, said he is also watching the stock market to determine gold's next move.
“Stock market volatility will be key for gold, and further weakness in the stock market will support gold prices,” he said. “For now, any dip in gold should be seen as a buying opportunity.”
4. Nicholas Frappell, global general manager at Sydney-based financial institution ABCBullion, said gold is technically neutral.
He said: "Recent price action, namely the resistance at the weekly cloud top, coupled with the higher CPI data, suggests a pullback below the recent range, with support at $1817 and $1800."
Frappell added that if geopolitical tensions between Russia and the US over Ukraine escalate, gold has a chance to break through.
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