Daily Management Review

Gold Price Surges Past $2,000 As Investors Seek A Safe-Haven A Amid The Ukraine War


Gold Price Surges Past $2,000 As Investors Seek A Safe-Haven A Amid The Ukraine War
On Monday, gold reached its highest level in more than a year and a half, and palladium reached an all-time high because of them being perceived to be safe-haven assets, while nickel surged more than 20 per cent on concerns about supply interruptions caused by sanctions against Russia and ongoing hostilities in Ukraine.
As Russia's expanding invasion of Ukraine continued to roil global commodities, gold prices climbed beyond $2,000 per ounce, palladium touched a record, LME 3-month nickel achieved its highest ever one-day gain, and oil and wheat rocketed to 14-year highs.
Concerns about economic development in nations still recovering from the Covid-19 outbreak have been raised as raw material costs have skyrocketed.
"The saying goes that the best cure for high prices is high prices," said OANDA senior analyst Jeffrey Halley in a report.
"Unfortunately, in a stagflationary environment, that doesn't hold true. I suspect growth projections for 2022 around the world will need to be sharply revised lower, and it will be interesting to see what the central banks of the world will do."
Stagflation characterizes nations that are suffering both an increase in inflation and stagnation in economic production.
As of 0520 GMT, spot gold was up 1 percent at $1,986.29 per ounce, after reaching its highest since Aug. 19, 2020 at $2,000.69 earlier in the day.
On Sunday, fighting prevented 200,000 people from fleeing the besieged Ukrainian city of Mariupol for the second day in a row, as Russian President Vladimir Putin pledged to push on with his invasion unless Kyiv submitted.
SPDR Gold Trust's holdings in the world's largest gold-backed exchange-traded fund jumped 0.4 per cent to 1,054.3 tonnes on Friday, the highest since mid-March 2021.
Palladium was trading at $3,170.49 per ounce, up 5.6 per cent from its all-time high of $3,172.22 earlier in the session.
Russia produces 40 per cent of the metal, which is used by vehicles in catalytic converters to reduce emissions.
Industrial metals increased as well, driven by big gains in nickel, which jumped more than 20 per cent as global supply chains sought to price in the possibility of a supply disruption from Russia, the world's third-largest nickel producer.
Chinese ferrous futures rose as well, with iron ore reaching a six-month high following a pessimistic economic prognosis over the weekend, which raised hopes for additional infrastructure expenditure in the world's second-biggest economy.
Oil prices rose more than 6%, reaching their highest level since 2008, as the United States and its European allies debated a Russian oil import embargo, while delays in the prospective return of Iranian petroleum to global markets fueled supplies.
By 0128 GMT, Brent crude had risen $8.46, or 7.2 per cent, to $126.57 per barrel, while WTI crude had risen $7.65, or 6.6 per cent, to $123.33.
As traders continued to examine the impact of probable off-limits supply from Russia, the world's largest wheat exporter, and limited output and exports from Ukraine, Chicago wheat futures climbed more than 5 per cent, hitting a 14-year high.
Buyers are looking for alternate sources now that Ukrainian ports are closed and operators are hesitant to deal with Russian wheat due to Western financial penalties.