(Bloomberg) — Gold advanced to the highest price since mid-November amid renewed investor demand as geopolitical tensions persist over Ukraine.
Russian President Vladimir Putin countered U.S. warnings that Russia may invade Ukraine within days by staging televised meetings with his foreign and defense ministers that emphasized de-escalation of tensions and continued efforts to find a diplomatic resolution to the security crisis. As recently as Sunday, U.S. officials were warning that a Russian invasion of Ukraine may be imminent, though Moscow dismissed that as “hysteria.” Russia has repeatedly denied it plans to invade Ukraine.
The Russia-Ukraine tensions are bringing investors back to gold as a store of value despite growing expectations the Federal Reserve will aggressively raise rates to curb the hottest inflation in four decades.
“The markets are reacting by seeking safe-haven assets in a dynamic that strongly supports the precious metal,” said Ricardo Evangelista, senior analyst at ActivTrades.
Exchange-traded funds have recorded inflows for four weeks straight, while hedge funds trading gold on the Comex also boosted their bullish bets in the week through Tuesday.
Still, Evangelista sees gold’s gains to be limited partly by the pace and timing of the Fed’s monetary tightening. The dollar would continue to strengthen if the Fed acts more aggressively, and thus weigh on bullion due to the inverted correlation between the two assets, according to him.
Spot gold rose 0.4% to $1,866.02 an ounce as of 10:21 a.m. in New York after surging 1.8% on Friday. The Bloomberg Dollar Spot Index rose 0.1%, while silver and platinum advanced.
Palladium rose as much as 3.9% to $2,398.25 an ounce, the highest intraday level since Feb. 2, before giving up most gains. Russia is the world’s top supplier of the metal, which is used in catalytic converters.
The latest developments in the Ukraine also lifted aluminum and nickel, since Russia is one of the top suppliers of both metals. Aluminum for three-month delivery gained as much as 3.3% to $3,241 a metric ton on the London Metal Exchange before slipping to $3,198.50. Nickel slid 0.2% after earlier rising as much as 3.5%. Other main LME metals were mixed, with copper down 0.2% and lead little changed.
