Commodities News

Gold Has Biggest Week in 3 Months After Cracking $1,900

By Barani Krishnan — Gold prices dipped on Friday but finished up for a third week in a row, with the biggest weekly gain in three months, as a combination of geopolitical concerns over the Russia-Ukraine conflict and soaring U.S. inflation drove a horde of safe-haven buyers into the yellow metal.

Gold’s most active contract on New York’s Comex, April, slipped $2.20 to settle Friday’s trade down 0.1% at $1,899.80 an ounce ahead of the long weekend break leading into Monday’s market holiday for the President’s Day.

For the week, the benchmark gold futures contract rose 3.1%, its most for a week since November.

Earlier on Friday, it hit an intraday peak of $1,905, marking an eight-month high with June being the last time when gold got to $1,900 levels.

“Gold prices have had quite a February and should find key resistance around the $1,930 level,” said Ed Moya, analyst at online trading platform OANDA. “With Monday being a holiday in the US that might hold if Ukraine tensions do not escalate further.”

“In just a couple of months, investors have done an about-face with gold,” added Moya. “Wall Street has gone from expecting robust economic growth around 4% this year and a return to normal next year, to fears that aggressive Fed tightening could invert the curve next year and send this economy into a recession early in 2024.”

The U.S. economy grew by 5.7 percent in 2021, its fastest since 1984, from a 3.5% contraction in 2020 caused by the coronavirus pandemic.

But inflation grew even faster, with the Consumer Price Index expanding 7.0% in the year to December, its most since 1982.

The Federal Reserve’s preferred inflation tool, the Personal Consumption Expenditures Price Index, which excludes volatile food and energy prices, expanded by 5.8% in the year to January.

The Fed slashed interest rates to almost zero after the outbreak of the coronavirus pandemic in March 2020. It is expected to resort to a series of rate hikes this year to counter inflation.

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