Gold futures climbed on Friday, posting a weekly gain of over 4%, as anxieties grew after the latest Russian assault in Ukraine saw it take over the country’s largest nuclear power facility, following shelling that started a fire at the plant.
Futures prices for both copper and palladium also settled at their highest levels on record, based on the front-month contracts, buoyed by supply risks, as Russia is among the world’s biggest producers of the metals.
The attack on the nuclear plant is raising fears that Moscow’s invasion of Ukraine is taking a more perilous turn in Eastern Europe.
“Gold is clearly elevated and headline sensitive now and [in the] foreseeable weeks,” Jeff Wright, chief investment officer at Wolfpack Capital, told MarketWatch. Prices “could quickly accelerate above $2,000 or fall sharply — if there was some substantive settlement” in the Russia-Ukraine conflict, which is becoming less likely by each passing day, he said.
April gold GCJ22,
May silver SIK22,
Copper and palladium were the standouts on Comex, with May copper HGK22,
Both metals have been supported by the prospects of supply disruptions from Russia.
April platinum PLJ22 also tacked on 3.3% to $1,116.80 an ounce, up nearly 6.4% for the week.
Gold was among the “beneficiaries of the dreadful scenes in Ukraine with investors rushing to safe havens at a time of crisis,” wrote Rupert Rowling, market analyst at Kinesis Money, in a daily note.
Apart from the geopolitical tensions, gold saw little reaction to the a monthly report on U.S. employment from the Labor Department released Friday.
The U.S. added 678,000 jobs in February, more than the 440,000 jobs forecast by economists polled by The Wall Street Journal. The unemployment rate dropped to 3.8% from 4%.
The data were “better than anticipated but also, given the Ukraine conflict, not impactful to gold,” said Wright. The nonfarm payrolls number “not only beat the estimates but labor participation rates increased to 62.3% — a sign of healthier job market and one which could potentially cool wage inflation,” he said.
The jobs data was the last before the Federal Reserve holds its next policy meeting, March 15-16. Federal Reserve Chairman Jerome Powell said in congressional testimony this week that he would propose an increase of 25 basis points to benchmark Fed fund rates to combat rising inflation.
Rowling said that the Fed’s likely move to raise interest rates is capping potential further gains in bullion and other precious metals which do not offer a yield.
“While the Fed will have to tread ‘carefully’ given the situation in Ukraine, this confirmation of interest rate hikes is putting a ceiling on gold, with its lack of yield making it less attractive in a climate of rising interest rates,” the Kinesis analyst wrote.
