Gold rose early Wednesday in Asia. The yellow metal holds on after hitting 19-month tops during the previous session, supported by safe-haven demand as the conflict in Ukraine continues and US Treasury yields rise.
Gold futures were up 1.10% at $2,065.70 by 12:20 am ET (5:20 GMT). They rose to $2,069.89 during the previous session, not far from the record $2,072.49 hit in August 2020.
The dollar, which normally moves inversely to gold, edged down on Wednesday but remained close to more than a year and a half high hit on Monday.
Apart from the US and Britain bans on Russian oil imports that had very little impact on gold, there doesn't seem to be an additional step-up in tensions between Russia and Western powers, DailyFX contriver Margaret principle told Reuters.
US Treasury yields rose, with the US Federal Reserve expected to raise interest rates when it drops its policy decisions over the next week. Across the Atlantic, the European Central Bank will downgrade its policy decision on Thursday.
In other precious metals, palladium jumped 3.3% to $3,284.67 an ounce, up 38% since Russia's invasion of Ukraine on February 24. Russia is a major global producer of metal.
Prices of Some Precious Metals Move Up
Palladium could move significantly higher because of all commodities, it has the highest percentage share coming out of Russia, ED&F Man Capital Markets analyst Edward Meir told Reuters.
Just this week, it brought out last year's high. So, if last year's pre-invasion was high, this tells me that we should be much higher post-invasion. Silver rose 1% to $26.66 an ounce, after hitting a nearly nine-month high on Tuesday. Platinum was up 1.2%.
In starting a new trading week last week, within the low of $1,897 point, the gold price started to reverse up towards $1,924 as the demand for safe-haven assets has increased with the geopolitical conflict situation in Russia – Ukraine still frightening the trading market.
On Friday the price of gold had also risen by $35 to $1,971 with news that Russian military forces had begun bombing Europe's largest nuclear plant while yields on 10-year US bonds fell more than 3%.
Gold continued its advance to the $1,930 area with the risk appetite waning. Unfortunately, there is no sign of a war between Russia vs Ukraine's imminent de-escalation.
The bad impact of this war on the global economic sector can be seen by the increasing number of concerns about global economic growth which is just trying to rise and inflationary pressures which have now become quite a dominant theme.
The Gold Price Has Strong Momentum
There is also quite a bit of momentum for gold to rise with all investors repositioning themselves for a new trading week full of uncertainty while all eyes are on the escalating Russian invasion of Ukraine.
The macro picture for gold is now ready to rise to a price of $2,000 per ounce with rising prices for other commodities including black gold, crude oil, palladium, nickel, wheat, and corn.
There are so many key commodities that are likely to continue to rise in price. Prices for commodities will remain high in the short term. This week amid heightened uncertainty, investors were worried about a nuclear reactor that reportedly caught fire.
Apart from that, there is also the issue of the Russians starting to annex Ukrainian cities, they have started to buy gold and crude oil and put up a sell position on stocks.
The level to watch out for when the gold price moves up to $2,000 is the $1,980 price point which will become a short-term resistance area.
Once it has broken through the $2,000 area, the price of gold commodities can continue to reach $2,050. Meanwhile, if it turns down, the level to watch is the $1,882 area.
