Wednesday, 10 August, 2022
HomeEconomyGold surges above $2,000 as war in Ukraine boosts demand for haven

Gold surges above $2,000 as war in Ukraine boosts demand for haven

Bullion is extending gains after posting biggest weekly advance since July 2020 amid concerns that the penalties against Russia could dim global growth & further stoke inflation.

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Singapore: Gold surged above $2,000 an ounce on growing demand for haven assets as investors weigh the geopolitical and economic fallout from Russia’s invasion of Ukraine.

Bullion is extending gains after posting its biggest weekly advance since July 2020 amid mounting concerns that the raft of penalties against Russia could dim global growth and further stoke inflation. Disruptions to supplies of grain, energy and metals are adding to price pressures, at a time when the Federal Reserve is preparing to raise interest rates.

“The move to safety in the face of significantly rising energy and food prices should continue to support gold for some time,” said Shyam Devani, a technical strategist and founder of SAV Markets in Singapore. The inability to tackle the inflation problem in today’s environment could see prices climb to $2,142 an ounce, he said.

President Vladimir Putin said again on Sunday the war will continue until Ukraine accepts his demands and halts resistance, dimming hopes for a negotiated settlement. Meanwhile, U.S. Secretary of State Antony Blinken said the Biden administration and its allies are discussing an embargo of Russian oil, raising fears of an inflation shock as the prices of Brent crude soared.

Investors are seeking out gold as a store of value. Inflows into bullion-backed exchange-traded funds amounted to 41.9 tons last week, the most since July 2020, according to initial data compiled by Bloomberg. This brought holdings to the highest level in almost a year.

“The move to safety in the face of significantly rising energy and food prices should continue to support gold for some time,” said Shyam Devani, a technical strategist and founder of SAV Markets in Singapore. The inability to tackle the inflation problem in today’s environment could see prices climb to $2,142 an ounce, he said.

Gold futures for April delivery rose as much as 2% to $2,005.20 an ounce, before trading at $1,990.80 on the Comex at 11:36 a.m. Singapore time. This was the highest intraday level since August 2020, the month it hit a record of $2,089.20. Prices climbed 4.2% last week.- Bloomberg


Also read: China’s defence spending grabs attention, but question is, will Beijing mediate in Ukraine


 

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