Gold futures retreat Friday but remain on course for best week in nine months


Gold futures moved lower on Friday, easing back a day after the crisis in Ukraine helped lift the commodity to its highest finish in eight months, but prices stayed on track to mark the sharpest weekly gain in nine months.

The precious metal has had a stellar week, with its role as a “haven for capital and a store of value” coming to the forefront as political tensions in Eastern Europe between Russia and Ukraine have increased, Colin Cieszynski, chief market strategist at SIA Wealth Management, told MarketWatch.

Early Friday, the most-active contract touched the highest intraday level so far this year at around $1,905 an ounce before retreating.

Gold for April delivery GCJ22, -0.47% GC00, -0.47% was down $5.30, or 0.3%, to $1,896.70 an ounce, after surging 1.6% on Thursday, carving out the highest settlement for the most-active contract since June 2, 2021, FactSet data show. For the week, the precious metal is up 3%, which would mark its steepest weekly rise since May of 2021.

Conflict between Russia and Ukraine intensified on Friday, with reports of shelling along the front line in eastern Ukraine’s Donetsk and Luhansk regions, with Kyiv saying its troops have been issued orders to exercise restraint in responding to artillery fire, the Wall Street Journal reported.

“Panic headlines spur speculative betting in Comex options, but underlying investment flips negative as physical traders take profit,” said Adrian Ash, director of research at BullionVault.

Gold prices may be likely to retreat if NATO-Russia tensions ease, but the “underlying drivers look set to remain,” he told MarketWatch. “Asian consumer demand continues to rebound from the COVID shutdown, and central banks also continue to accumulate gold as a group.”

Investors in precious metals also have been closely monitoring monetary policy developments, with the Federal Reserve expected to raise interest rates to combat high inflation.

The minutes released on Wednesday from the Fed’s late-January policy meeting, however, didn’t imply that the central bank was adopting a more hawkish stance than investors have already anticipated, which had helped support further buying in nonyielding gold.

“Two major themes have contributed to increases in the price of gold: inflation and geopolitical tensions from the Russia-Ukraine border crisis,” said Jason Teed, co-portfolio manager of the Gold Bullion Strategy Fund QGLDX, +1.42%. “Shorter term movements have been seen with news of the crisis, while inflation, being a more persistent force, seems a constant tailwind for the metal.”

“In the coming weeks, it’s likely that gold will continue to enjoy upward pressure from high inflationary pressures, but any geopolitical premium will be harder to predict,” Teed, who’s also director of research at Flexible Plan Investments, told MarketWatch. “A price in excess of $2,000 would not be an unreasonable expectation in the coming months.”

In other Comex dealings, March silver SIH22, +0.25% rose 0.6% to $24.025 an ounce, trading about 2.9% higher for the week. March copper rose 0.7% to $4.555 a pound, eyeing a weekly rise of 1.1%.

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April platinum PLJ22, -0.93% lost 0.4% to $1,088.50 an ounce, but traded nearly 7% higher for the week, while March palladium PAH22, -1.28% fell 1.5% to $2,323.50 an ounce, still trading 5.9% higher for the week.

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