Gold prices soared on Monday as the war in Ukraine boosted demand for safe-haven bullion, with investors keeping a close eye on the Moscow-Kyiv peace talks.
Craig Erlam: There may be significant safe-haven flows underneath
OANDA senior market analyst Craig Erlam comments on the impact of developments in Ukraine on the markets as follows:
If we see another escalation around Ukraine, sanctions triggering another commodity volatility, it will drive significant safe-haven flows to gold, even inflation hedges.
“Developments will continue to offer a positive medium for gold prices in the medium term”
Heraeus precious metals analysts, on the other hand, draw attention to real interest rates and make the assessment that “As real interest rates rise, the appetite for gold as a hedge against inflation risk may decrease”.
Atlanta Federal Reserve Bank Chairman Raphael Bostic said on Monday he is open to more aggressive policy tightening as he plans six rate hikes for 2022. Heraeus analysts evaluate it as follows:
However, even if the Fed’s top rate hike forecasts come true, inflation will still be ahead and real interest rates will be negative. This will continue to provide a positive environment for gold in the medium term.
“Fed rate hike expectations put pressure on gold prices”
cryptocoin.com As we reported, gold looks stable for now, following its biggest weekly loss in nine months. In the view of economists at Commerzbank, the yellow metal is still seen as a safe haven and store of value. Economists make the following assessment:
At 3.4%, gold posted its biggest weekly loss since last June. We attribute this to the Fed’s rate hike and the market’s expectation of further rate hikes during the year. Higher bond yields and higher real interest rates may also have contributed to last week’s decline. By contrast, the US dollar depreciated somewhat. So it probably didn’t create any headwinds.
Noting that ETF investors continue to make strong gold purchases, economists say gold ETFs tracked by Bloomberg registered 30 tons of inflows last week, and speculative financial investors remain above-average compared to the past 1.5 years, according to statistics from the CFTC. According to economists, it’s not just ETF investors who still rely heavily on gold as a safe haven and store of value, but speculative financial investors as well.
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