Gold Price Pushes Above $1,900 as Ukraine Crisis Spurs Haven Demand

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Gold dropped from an eight-month high after Russia agreed to meet with the U.S. for talks over the Ukraine standoff, easing some geopolitical concerns that had fueled demand for the haven asset.

Russia responded to an offer for a meeting between U.S. Secretary of State Antony Blinken and Russia Foreign Minister Sergei Lavrov in Europe with proposed dates for late next week. The U.S. has accepted, “provided there is no further Russian invasion of Ukraine,” State Department spokesperson Ned Price said in a statement.

Tensions have been high this week as the U.S. ramped up warnings of a possible Russian attack, with President Joe Biden saying a “false-flag” event may be under way. Russian officials said no invasion of Ukraine was underway and none was planned. But the Kremlin said in an official response to the Biden administration’s proposed security assurances that the offers were unsatisfactory and Russia might have to resort to unspecified “military-technical measures.”

Gold has made a strong start to the year, surging to the highest since June, as the possibility of a conflict in Europe buoyed prices. The commodity is set for a third weekly gain even as the U.S. Federal Reserve is preparing to raise rates, which could damp demand for the non-interest bearing precious metal. 

“Expect gold to remain quite volatile,” said John Feeney, business development manager at Sydney-based bullion dealer Guardian Gold Australia. “We could still see gold add a significant amount on official news of an invasion,” Feeney said, adding that there could be a drop of $50 or more if the situation calmed.

Citigroup Inc. analysts including Aakash Doshi upgraded their near-term gold forecast to $1,950 from $1,825, citing geopolitical tensions. Further out, the bank remains bearish, with a target of $1,750 over six to 12 months as “higher real yields and stronger equities can weigh on bullion prices again.”

Spot gold fell 0.3% to $1,891.98 at 6:28 a.m. in London. Prices had earlier climbed as much as 0.2% to $1,902.48 an ounce, the highest since June 11. The Bloomberg Dollar Spot Index was flat. Silver and platinum rose, while palladium dropped. Source: Bloomberg