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Futures for gold on Monday were headed sharply lower as investors watched the third week of the invasion of Ukraine by Russia and awaited what is expected to be the first rate increase of benchmark interest rates by the Federal Reserve.
April gold
GCJ22,
fell $21.40, or 1.1%, to trade at $1,963.10 an ounce, after prices for the yellow metal, based on the most-active contract, posted a weekly gain of 0.9%, FactSet data show.
The decline for bullion comes as investors tentatively bought stocks rather than assets perceived as havens such as gold and U.S. Treasurys, with the 10-year note
TMUBMUSD10Y,
yielding around 2.08%, near its highest since July of 2019.
Ukraine and Russian officials were embarking upon a fourth round of talks, which will giving a modest lift to risk appetite, even after Russian forces, over the weekend, laid siege to a number of other Ukrainian cities. A Russian airstrike on a Ukrainian military training center near Ukraine’s border with Poland, a NATO member, came after Moscow warned the West that it would consider arms deliveries to Ukraine as legitimate targets.
The Eastern European conflict come as the Fed is widely expected to deliver a quarter-point increase to the benchmark fed-funds rate when it concludes a two-day policy meeting on Wednesday.
Investors will be focused on Fed officials’ outlook for inflation and the view of global health against the backdrop of military conflict that has exacerbated pricing pressures globally and raised concerns of a world-wide economic slowdown.
Naeem Aslam, chief market analyst at AvaTrade said in a note that the war in Ukraine “keeps on pushing traders toward haven, and they believe that the Fed’s monetary policy under the current situation doesn’t hold much value.
“It is highly likely that gold price, which may surge until the event, would see some retracement as the dollar index is bound to move higher, a significant denominator for the gold price,” Aslam wrote.
