Gold prices jumped to nearly two-month highs on Friday as concerns over rising inflation and escalating tensions between Russia and Ukraine boosted demand for the safe-haven metal.
“Gold may rise above $1,900 if the Ukrainian invasion begins”
A traditional haven during times of geopolitical uncertainty, gold has continued to rise this week and was trading near $1,860 in the latest move. While the US has not concluded that Russian President Vladimir Putin has made a final decision, White House National Security Advisor Jake Sullivan told reporters that there is a possibility of an invasion next week as the Winter Olympic Games continue in Beijing.
In a note, OANDA senior market analyst Edward Moya discusses the impact of the Fed’s stance and geopolitical tensions on the Ukraine front on gold prices:
Gold is starting to regain its footing as some investors seek protection against an overly aggressive Fed tightening cycle that could threaten growth. If unity moves occur, the precious metal could rise above the $1,900 level. Gold traders don’t want to go short on the weekend.
Carlo Alberto De Casa: Investors still rely on gold so far
cryptocoin.com As we reported, data showed that the US January consumer price index was warmer than expected at 7.5% year-on-year. However, he managed to continue his gold-winning streak. Treasury rates, investors’ pricing in a more aggressive Federal Reserve, and St. Louis Federal Reserve Bank President James Bullard called for a 100 basis point rate hike by July 1.
Rising interest rates may strain gold as it raises the opportunity cost of holding non-yielding assets. Carlo Alberto De Casa, foreign market analyst at Kinesis Money, comments in a note:
We should note that rising inflation and positive interest rates can be challenging for precious metals. But so far, investors still rely on gold. This could also be an interesting hedge in case of market disruption. In this scenario, gold also represents a hedge in case the central banks fail to control inflation.
Chris Gaffney, head of world markets at TIAA Bank, said that gold has seen some safe-haven inflows amid concerns about geopolitical risks and the impact of higher interest rates on global growth.
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