Economic news

Gold Gains as Weaker Dollar, Ukraine Tensions Boost Appeal

  • SPDR gold holdings rise to over 5-month high
  • U.S. non-farm payrolls data due on Friday
  • Palladium off 5-month highs

Feb 1 (Reuters) - Gold prices extended gains for a second session on Tuesday as the U.S. dollar retreated and ongoing tensions over Ukraine underpinned the metal's safe-haven demand.

Spot gold gained 0.3% to $1,802.30 per ounce by 09:50 a.m. EST (1450 GMT). U.S. gold futures rose 0.4% to $1,803.80.

The Fed sounded much more dovish on Monday than they did last week and as a result, we've seen the dollar retreat and asset prices rally which was "almost specifically due to yesterday's Fed speak", said David Meger, director of metals trading at High Ridge Futures.

Fed policymakers said they'll raise interest rates in March but spoke cautiously on Monday about what might follow in the face of an uncertain outlook for inflation and an ongoing pandemic. 

The dollar index eased off multi-month peaks against its rivals, supporting demand for the greenback-priced bullion among buyers holding other currencies.

Russia-Ukraine tensions continue to keep a bid on gold's safe haven demand, Meger noted.

Ukraine on Tuesday announced plans to boost armed forces as European leaders lined up to back the country in a standoff with Russia. 

Reflecting investor appetite, holdings of the world's largest gold-backed exchange-traded fund, SPDR Gold Trust , rose to the highest levels since mid-August on Monday.

Investors are now looking to the U.S. non-farm payroll data due later this week.

"The weak jobs print that we're expecting is unlikely to sway the Fed from its decisively hawkish tone. Instead, we expect the central bank to look past recent weakness as being related to Omicron's fallout," TD Securities wrote in a note.

"We expect that the precious metals complex will struggle to attract capital in this context."

Spot silver climbed 1.5% to $22.77 an ounce, and platinum rose 1% to $1,028.44.

Palladium rose 0.6% to $2,364.87, but was trading below its highest levels since early September reached on Monday.

Reporting by Kavya Guduru in Bengaluru

Source: Reuters

To leave a comment you must or Join us

More news

Back to economic news list

By visiting our website and services, you agree to the conditions of use of cookies. Learn more
I agree