Gold futures are struggling to stay above the crucial $1,900 mark to end the trading week. The yellow metal has been off to a hot start in 2022 and is poised for a hefty weekly gain. A whole host of factors is driving gold prices, but many investors are glued to the events unfolding in Eastern Europe.
April gold futures dipped $2.20, or 0.12%, to $1,899.80 per ounce at 12:57 GMT on Friday on the COMEX division of the New York Mercantile Exchange. Gold is poised for a weekly boost of more than 2%, lifting its year-to-date gain to nearly 4%.
Silver, the sister commodity to gold, topped $24 on Friday. March silver futures added $0.15, or 0.63%, to $24.025 an ounce. The white metal climbed 1.8% this week, bringing its year-to-date gain to nearly 3%.
This is the best weekly performance for the metals market in nine months, buoyed by Ukraine-Russia tensions, which have seeped into the broader financial markets.
There have been mixed reports about Russia attacking Kyiv, but Moscow insists that it has reduced the number of troops at the Ukraine border. At the same time, the U.S. administration keeps claiming that an invasion is imminent.
Meanwhile, the Federal Reserve released minutes from last month’s Federal Open Market Committee (FOMC) policy meeting. The minutes revealed that some officials are ultra-hawkish and wanted to end quantitative easing earlier than scheduled. But the overall message was that the central bank is prepared to raise interest rates next month.
“The escalation in military aggression in Ukraine has seen a flight to gold with the price now challenging $1,900 an ounce and trading at levels not seen since June 2021,” wrote Rupert Rowling, market analyst at Kinesis Money, in a daily note.
“The fact these gains have come in a week in which the Federal Reserve has plotted out its likely interest rate hike trajectory highlights that fear is the dominant emotion among many investors.”
The US bond market was mostly in the red on Friday, with the benchmark 10-year yield down 0.035% to 1.939%. The one-year bill dipped 0.02% to 1.001%, while the 30-year bond shed 0.05% to 2.263%.
Falling yields are typically bullish for gold since it reduces the opportunity cost of holding non-yielding bullion.
The US Dollar Index (DXY), which measures the greenback against a basket of currencies, edged up 0.07% to 95.87, from an opening of 95.80. The DXY is on track for a dip of 0.2%, adding to its year-to-date loss of 0.1%.
A weaker buck is good for dollar-denominated commodities because it makes it cheaper for foreign investors to purchase.
In other metal markets, March copper futures added $0.029, or 0.6%, to $4.55 per pound. March platinum futures shed $1.60, or 0.15%, to $1,091.10 per ounce. May palladium futures slid $1.10, or 0.05%, to $2,358.00 an ounce.