At almost week high gold due to geopolitical uncertainty
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Gold closed at a one-week high on Wednesday, despite the Federal Reserve’s increasingly aggressive interest rate rhetoric, as geopolitical uncertainty remains as no diplomatic solution emerges that could end Russia’s offensive in Ukraine. .
The US Federal Reserve “has signaled that a series of planned interest rate hikes are imminent throughout the year, so gold is likely to face a less and less favorable macroeconomic environment,” said Rupert Rowling, market analyst at Kinesis Money. however that the only factor that could offset these pressures is the further escalation of the war in Ukraine, as is currently the case.
Fed Chairman Jerome Powell said Monday that the next rate hike could be 0.5% from 0.25% previously announced. On Tuesday, St. Louis Fed Chairman James Bullard also said the Fed should move more aggressively on interest rate hikes, followed by Cleveland Fed Chairman Loretta Mester, who said the Fed should raise its key interest rate to around 2.5% this year.
San Francisco Fed Chairman Mary Daly took the baton on Wednesday, noting that “everything is on the table” in May, including a 50 basis point increase.
The Fed’s statements “caused a sharp rise in government bond yields and thus securities, which makes it less attractive to hold non-yielding assets, such as precious metals,” analysts said.
However, as they note, the geopolitical uncertainty caused by the ongoing war in Ukraine, at a time when even tougher sanctions are imminent from the West, keep alive the investment interest in safe havens such as gold.
Thus, on Wednesday, gold returned to an upward trend, with the April contract strengthening by $ 15.80 or 0.8% and ending the day at $ 1,937.30 an ounce. This is the highest closing of the precious metal since March 17, according to FactSet.
Silver also made gains today, with the May contract adding 29 cents or 1.1% and closing at $ 25,189 an ounce.
For the rest of the metals, copper for May delivery rose 1.6% to $ 4,777 a pound, the June contract for palladium rose 1.7% to close at $ 2,519.30, while platinum fell 0.4%. April delivery, ending the day at $ 1,021 an ounce.