Gold drives to $2,000 an ounce, oil breaks $130 a barrel

Gold drives to $2,000 an ounce, oil breaks $130 a barrel

The Ukraine-Russia conflict continues to roil markets, with oil prices pushing to its highest level since 2008 and gold prices hitting $2,000 an ounce.

Oil prices have rocketed higher following the Asian open. While off their highs, April crude oil futures last traded at $122.79 a barrel, up 7% on the day. According to media reports, the Biden administration is in talks with European leaders to consider cutting off Russian crude oil exports.

The war in Eastern Europe is also driving safe-haven demand into gold as prices rise to their highest level since August 2020. April gold futures last traded at $2,001.80 an ounce, up 1.79% on the day.

Bitcoin is down relatively flat on the day, trading at $38,367 as of 9 p.m. ET.

Asian and Australian markets opened lower. The Hang Seng Index is off 2.72%. The S&P/ASX200 dropped 49.20 points or 0.69% to 7,061.60.
 

By Michael McCrae

For Kitco News

Time to buy Gold and Silver on the dips

 

David

‘Tremendous momentum’ in gold price -Watch out for next week’s U.S. inflation number as geopolitics continue to drive metals

'Tremendous momentum' in gold price -Watch out for next week's U.S. inflation number as geopolitics continue to drive metals

(Kitco News) There is strong momentum in the gold space as investors repositioned themselves going into another uncertain weekend with all eyes on Russia's intensified attack on Ukraine.

Gold gained more than $35 on Friday as Russian forces took control over Europe's biggest nuclear power plant in Ukraine in a very alarming assault.

"Unfortunately, there are no signs that you are going to see a de-escalation of the war in Ukraine any time soon. As we take a look at the impact that is having on the global economy, you'll see global growth concerns and inflationary pressures become dominant themes," OANDA senior market analyst Edward Moya told Kitco News. "That will likely lead to further safe-haven flows, and gold is going to shine."

The macro picture is set up for gold to hit $2,000 an ounce as other commodities, including oil, palladium, nickel, wheat, and corn surge.

"The way things are looking, you have too many key commodities that are likely to continue to keep on rising — grains, metals, energy. We'll see elevated prices for the foreseeable future," Moya said.

If commodity spikes have a lasting impact on inflation, central banks will be forced to hike rates more aggressively. But that doesn't mean that's bad for gold, Moya added.

"While the U.S. central bank showed resistance to rapid rounds of rate hikes as they assess the impact of the war, you should not rule out a chance of a half-a-point increase later this year. I'm still in the camp of four or five rate hikes this year," said Moya. "We could see the Fed becoming more aggressive in fighting inflation this summer. That uncertainty and that debate should be positive for gold and help gold rally to $2,000."

One key metric to watch next week will be the latest U.S. consumer price index (CPI), which is scheduled to be released on Thursday.

"We could see $150 oil soon. Inflation will be much higher because of energy. Wait until you see the next CPI number. It is going to be above 8%," Phoenix Futures and Options LLC president Kevin Grady told Kitco News. "And if they were using the old metrics, annual inflation would be running at 12%-15%."

On Friday, market participants positioned themselves for another uncertain weekend ahead, said Grady.

"You just don't know what's going to happen over the weekend. Investors are nervous about the nuclear reactor and Russia capturing some Ukrainian cities. They are positioning long gold, short stocks, and long crude oil," he said.


Gold price levels to watch

The levels to watch on the way to $2,000 are $1,980 on the upside and $1,882 on the downside, said Grady.

At the time of writing, April Comex gold futures were trading at $1,971.20, up 1.82% on the day.

Moya pointed out that the $1,980 will act as short-term resistance, adding that gold can easily swing $50 in any direction. But once that level is reached, the market will become fixated on $2,000 an ounce.

"The catalysts are all there. Once we break $2,000, then $2,050-70 is the trading range where you'll see gold find some good resistance. Gold has underperformed a lot of these other commodities. There is still tremendous momentum here," he said.

Next week's data

Thursday will be the key data day for macro releases, with February's CPI and U.S. jobless claims scheduled for then. The ECB interest rate decision will also take place on Thursday.

"The risk of stagflation has clearly increased, complicating the ECB's dilemma: how to react to accelerating inflation that cannot be softened by monetary policy. No one can seriously expect the ECB to start normalizing monetary policy at such a moment of high uncertainty," said economists at ING.

By Anna Golubova

For Kitco News

Time to buy Gold and Silver on the dips

David

Inflation and the crisis in Ukraine cause gold to surge, now only $27 away from $2,000

Inflation and the crisis in Ukraine cause gold to surge, now only $27 away from $2,000

Gold prices have been moving to a higher value at a pace not witnessed in quite some time. On Monday, gold futures basis most active April 2022 contract opened at $1920 and closed at $1900 after recovering from a low of $1893. On Tuesday gold prices gained over $40 and accelerated the defined uptrend that began the first week of January. The rally has continued today.

As of 4:22 PM EST, April futures are currently up by $39.40 (2.00%) and fixed at $1974.90, which means that gold gained $74.90 this week resulting in a net weekly gain from Monday’s low to today’s current price of 4.3264%.

When added to the price advance of January 31, that accomplishment reveals a profound fact. In just over one month (January 31 to February 4) gold prices have gained $194.90, a percentage gain of 10.94%.

Gold is one of the most intrinsic safe-haven assets

Gold is both an excellent hedge against inflationary pressures and reacts quickly to geopolitical uncertainty and rising inflation. The recent gains in gold are based upon its sensitivity to both a surge in inflation and a geopolitical crisis.

In this instance it is the combination of these two events occurring simultaneously. This synergistic effect of both geopolitical uncertainty and the existing inflationary pressures simultaneously has magnified gold’s influence on the global economy.

Most alarming is that the geopolitical crisis in Ukraine has added another layer to inflationary pressures. The invasion by Russia into Ukraine was unthinkable just a few months ago. Not since World War II has a sovereign country invaded another sovereign country under false pretext. While Russia claimed their actions were to act as peacekeepers to protect the pro-Russian separatists in eastern Ukraine, they announced that these two areas are now independent countries. But the truth is that the intention of Russia was to destroy its military and overthrow its government to install a puppet government sympathetic to Russia.

Prior to the invasion by Russia into Ukraine inflationary levels were already at a 40-year high. Recent data has shown that the CPI (consumer price index) has reached 7.5% YOY. This is the highest level of inflations since February 1982. Based upon recent events it is an absolute certainty that inflationary levels will spiral to yet an even higher level.

The primary catalyst which will take inflation higher will be directly attributable to two primary factors first the rising cost of crude oil, which is now trading at $115 per barrel. Secondly, Ukraine’s ability to produce agricultural products to export to Europe has been diminished or obliterated.

Recent surge in oil

In December 2021, crude oil futures traded to a low of $62.51. By the first week of January 2022, crude oil futures had risen to $74.58. By the end of February oil had climbed as high as $90 per barrel.

From December to February, in the short span of three months, a barrel of crude oil cost rose 43.97% more. Even more alarming is that oil has gained 19.60% in the first four trading days of this month. That equates to an average daily gain of 4.9% from Tuesday, February 1 to Friday, February 4.

Recent surge in food costs

it’s a fact that higher prices in oil dramatically influence the cost of growing and transporting food. These costs have risen dramatically exacerbated by the current conflict in Ukraine. Ukraine has in essence been a major component supplying agricultural products to Europe. The current crisis has had a dramatic impact on the ability of Ukraine to continue providing agricultural necessities to Europe.

Conclusion – spiraling inflation and a prolonged invasion will be devastating

The obvious takeaway from the effect of the Ukraine conflict on current levels of inflation is profound. It most certainly almost guarantees that inflationary pressures will continue to spiral to higher levels causing extreme hardship to global citizens who require these goods for survival.

For the reasons we have spoken about above, gold has had such a stellar performance and dramatic price increase. The precious yellow metal is truly acting as a safe-haven asset that should continue to gain value as a hedge against other investment classes in times of political uncertainty and high inflation levels. The sad truth is that the current conflict in Ukraine most likely will not have a quick and peaceful resolution. It will take an extended period of time to come to an end.

Based upon that assumption that the Ukraine/Russia crisis will not be resolved quickly and that current levels of inflation will continue to spiral to higher levels is almost a certainty. If that assumption is correct, it is easy to assume that at some point soon gold will challenge its all-time high of $2088 and trade to a new record high price.
 

By Gary Wagner

Contributing to kitco.com

 

Time to buy Gold and Silver on the dips

 

 

David

Safe-haven demand continues to push gold price higher

Safe-haven demand continues to push gold price higher

Gold prices are moderately higher in midday U.S. trading Thursday, on continued safe-haven demand as risk appetite remains squelched by the Russia-Ukraine geopolitical situation. April gold futures were last up $11.20 at $1,933.70 and May Comex silver was last down $0.035 at $25.155 an ounce.

Risk aversion remains elevated amid the Russia-Ukraine war that has intensified. Crude oil and grain prices are soaring and that’s also stoking inflation fears. In a stunning inflation report coming from the Euro zone, its January producer price index rose 30.6%, year-on-year, mostly due to rising energy prices.

Bloomberg in an email dispatch Thursday morning reported, “With traders continuing to avoid Russian oil supplies over sanctions uncertainty, OPEC-plus not hiking their scheduled quota increase Wednesday and Iran talks still not resolved, traders are paying the biggest premium in more than two years to bet on higher prices. Aluminum, nickel, zinc and wheat all continue to rise, putting the Bloomberg Commodity Spot Index on course for its biggest weekly gain since 1960.”

On Friday comes the February U.S. employment situation report from the Labor Department. The key non-farm payrolls number is seen coming in at up 440,000 after a gain of 467,000 in January.

The key outside markets today see Nymex crude oil prices near steady and trading around $110.50 a barrel after hitting an 13.5-year high of $116.57 overnight. The U.S. dollar index is higher again today. The benchmark U.S. 10-year Treasury note is presently yielding 1.854%.

Technically, April gold futures bulls have the solid overall near-term technical advantage. Prices are in a four-week-old uptrend on the daily bar chart. Bulls' next upside price objective is to produce a close above solid resistance at the February high of $1,976.50. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,882.50. First resistance is seen at today’s high of $1,941.40 and then at this week’s high of $1,952.60. First support is seen at today’s low of $1,923.10 and then at $1,916.00. Wyckoff's Market Rating: 8.0.

May silver futures bulls have the firm overall near-term technical advantage. Prices are in a four-week-old uptrend on the daily chart. Silver bulls' next upside price objective is closing prices above solid technical resistance at $26.00 an ounce. The next downside price objective for the bears is closing prices below solid support at $23.50. First resistance is seen at the February high of $25.705 and then at $26.00. Next support is seen at Wednesday’s low of $24.96 and then at $23.50. Wyckoff's Market Rating: 7.0.

May N.Y. copper closed up 915 points at 475.85 cents today. Prices closed nearer the session high today and hit a 10-month high. The copper bulls have the solid overall near-term technical advantage and gained more power today. Prices are in a choppy, two-month-old uptrend on the daily bar chart. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at 500.00 cents. The next downside price objective for the bears is closing prices below solid technical support at 450.00 cents. First resistance is seen at today’s high of 478.25 cents and then at 480.00 cents. First support is seen at 470.00 cents and then at today’s low of 466.15 cents. Wyckoff's Market Rating: 8.0.
 

By Jim Wyckoff

For Kitco News

Time to buy Gold and Silver on the dips

 

 

David

Gold has a moderate decline as the second round of of negotiations begin

Gold has a moderate decline as the second round of of negotiations begin

Today gold prices declined as Russian and Ukrainian diplomats met to negotiate an end to the war. We are seeing the same reaction that occurred during their first round of negotiations, which was a softening of gold pricing and then a return to a rally mode once it was apparent that the negotiations ended in a stalemate. The fact is that there is little to no common ground between the two sides. Ukraine and Russia have opposite intentions for a peaceful resolution of the war. The only common element that they want is for the war to end.

Both sides have drawn hard lines in the sand that are the opposite of the desires of the other side. Russia is adamant that their invasion will not end unless Ukraine firmly commits that they will not seek to align with the EU or NATO. This is an un-negotiable component that Putin demands.

Ukraine wants Russian troops to stop the invasion which has led to death & destruction. Ukraine rightfully claims that its sovereign country was invaded without provocation. Their military response was justified to defend themselves. Russia attacked Ukraine because of Ukraine’s desire to become aligned and join the European Union.

There is a clear distinction between actions by Russia and Ukraine. Russia is the aggressor, and Ukraine has simply been put in a position to defend itself against a superpower. No sovereign country has the right to exert its will on another country by coercion or force! This is why other countries have stood up for Ukraine.

The coalition of countries standing up against Russia have implemented extremely harsh economic sanctions, yet have committed not to put troops on the ground in Ukraine.

That being said, and with such hard lines in the sand, a diplomatic solution is close to impossible. The obvious fact is that neither side will bend their current position. It is Russia that is attempting to impose its will on a free and sovereign country and that is the dilemma. This means that the talks will end in a stalemate and Russia will have to decide whether to acknowledge that they have no right to impose their will and withdraw or carry the burden of ever-increasing isolation and sanctions by a large coalition of countries imposing sanctions to force the Russians to withdraw.

It is for that reason that Russia will continue and escalate its military actions causing more death and destruction (I pray I that I’m wrong). This would be highly supportive of the safe-haven assets that have moved aggressively higher during this crisis. I do not believe today’s price decline was technical but simply a pause as Ukraine and Russia met for negotiations. I would expect gold as well as silver to return into full rally mode if in fact there is no positive outcome from today’s negotiations.

 

By Gary Wagner

Contributing to kitco.com

Time to buy Gold and Silver on the dips

 

 

David

Gold, silver power higher amid keen marketplace anxiety

Gold, silver power higher amid keen marketplace anxiety

Gold and silver prices are sharply higher in midday U.S. trading Tuesday, with gold poised to close at a 1.5-year high close. More safe-haven demand amid a very spooked marketplace is featured as the Russia-Ukraine geopolitical situation appears to be deteriorating by the day. April gold futures were last up $35.80 at $1,936.60 and May Comex silver was last up $0.909 at $25.27 an ounce.

The West’s very heavy sanctions have crippled Russia’s economy. Add that to the unexpectedly strong resistance being put up by the Ukrainian military to its Russian aggressors and Russian President Putin has been put on very thin ice. Some pundits are calling him “unhinged” based upon his recent comments and television appearances. If the demoralized Russian public becomes seriously disenchanted with Putin, the marketplace wonders what he will do. Will his generals attempt a coup? Will Putin attack Western countries? In a desperate move to save his hide or to safe face, would Putin resort to using his nuclear missiles? These are questions that will keep markets on edge for likely some time to come.

U.S. President Biden will address the Russian situation Tuesday evening in his annual state of the union address.

Global stocks markets were mixed to lower overnight and the U.S. stock indexes are solidly lower at midday. Reports say Russian has stepped up its military campaign against Ukraine Tuesday, including shelling civilian targets.

The key outside markets today see Nymex crude oil prices posting sharp gains and trading around $106.50 a barrel. The U.S. dollar index is sharply higher today. The benchmark U.S. 10-year Treasury note is presently yielding 1.709%. U.S. Treasuries are seeing strong safe-haven buying interest.

Technically, April gold futures prices are poised to close at a 1.5-year high close today. Bulls have the solid overall near-term technical advantage. Prices are in a four-week-old uptrend on the daily bar chart. Bulls' next upside price objective is to produce a close above solid resistance at the February high of $1,976.50. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,850.00. First resistance is seen at $1,950.00 and then at $1,976.50. First support is seen at today’s low of $1,903.00 and then at this week’s low of $1,892.20. Wyckoff's Market Rating: 8.5.

May silver futures bulls have the firm overall near-term technical advantage. Prices are in an uptrend on the daily chart. Silver bulls' next upside price objective is closing prices above solid technical resistance at $26.00 an ounce. The next downside price objective for the bears is closing prices below solid support at $23.00. First resistance is seen at the February high of $25.705 and then at $26.00. Next support is seen at $25.00 and then at today’s low of $23.345. Wyckoff's Market Rating: 7.0.

May N.Y. copper closed up 1,260 points at 458.30 cents today. Prices closed near the session high today. The copper bulls have the overall near-term technical advantage. Prices are in a choppy, two-month-old uptrend on the daily bar chart. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at the February high of 469.95 cents. The next downside price objective for the bears is closing prices below solid technical support at 440.00 cents. First resistance is seen at 460.00 cents and then at 463.80 cents. First support is seen at 450.00 cents and then at this week’s low of 445.00 cents. Wyckoff's Market Rating: 6.5.
 

By Jim Wyckoff

For Kitco News

Time to buy Gold and Silver on the dips

David

Gold price to hit $2,150 on Russian invasion, ‘very high inflation path’ – Goldman Sachs

Gold price to hit $2,150 on Russian invasion, 'very high inflation path' – Goldman Sachs

As the West steps up sanctions against Russia in the aftermath of a full-scale invasion of Ukraine, Goldman Sachs raised its commodities price forecasts, citing supply disruptions and an even more problematic inflation outlook.

The commodities to pay close attention to are the ones Russia is a major producer of — oil, gas, aluminum, palladium, nickel, wheat and corn.

"The range of near-term price outcomes for commodities has become extreme, given the concern of further military escalation, energy sanctions or potential for a cease-fire," Goldman said in a note to clients on Sunday. "We expect the price of consumed commodities that Russia is a key producer of to rally from here."

Gold is another safe-haven commodity that is due for a much bigger rally going forward, according to Goldman.

"The recent escalation with Russia create clear stagflationary risks to the broader economy, driven by higher energy prices, which reinforce our conviction in higher gold prices in coming months and our $2,150/toz (troy ounce) price target," Goldman said.

In reaction to additional sanctions against Russia, gold surged above $1,916 an ounce on Monday. Some gains were lost as the trading session progressed, with April Comex gold last at $1,905.70. But the precious metal is still set for the best monthly performance since May.

Goldman explained that gold would play a central role in this conflict as Russia turns to the precious metal for leverage amid sanctions. Russia's gold reserves total 2,298.53 tonnes, according to World Gold Council.

"Gold's unique role as the currency of last resort will likely be apparent if restrictions on Russia's central bank accessing its offshore reserves leave it leveraging its large domestic gold stockpiles to continue foreign trade, most likely with China," the bank said.
 

Gold price could hit $2,000 'in only a matter of days' – analysts

Also, Goldman increased its one-month Brent crude oil price projection to $115 a barrel from $95, adding that Russia is becoming more isolated as the West's sanctions kick in. "[For Brent, there is] significant upside risks on further escalation or longer disruption," the note added.

At the time of writing, Brent was trading above $100 per barrel and the U.S. West Texas Intermediate (WTI) was at around $96.

From the macro perspective, Goldman raised its inflation outlook, stating that it is "increasingly concerned" about the pace of inflation in 2022. "A very high inflation path in 2022 should make an easy case for steady rate hikes at all seven remaining" Federal Reserve meetings in 2022, said Goldman economist David Mericle said in another note to clients.

The bank now expects core inflation to run at 3.7% through the end of this year. Its previous estimate was at 3.1%. In light of this, Goldman is estimating to see seven rate hikes in 2022 and another four in 2023.

The first rate hike will likely come on March 16, with the CME Fed WatchTool projecting a 92.5% chance of a 25-basis-point hike.

 

By Anna Golubova

For Kitco News

Time to buy Gold and Silver on the dips

 

David

Gold price starts the week back above $1,900 but sees major volatility on further safe-haven demand

Gold price starts the week back above $1,900 but sees major volatility on further safe-haven demand

he gold market continues to see significant volatility as Western nations react to the Russian invasion of Ukraine.

Safe-haven demand pushed gold prices up 2% at the start of the Asian trading session, kicking off the new week on a solid note. However, analysts note that the precious metal still faces strong momentum in the U.S. dollar as the world's dominant currency in this uncertain environment.

April gold futures last traded at $1,917.50 an ounce, up 1.5% on the day. Gold's solid start comes as U.S. equity markets see strong selling pressure with the S&P 500 opening the week down 2%.

Traders have a lot to catch up on as markets are just starting to react to the news over the weekend that NATO nations imposed further sanctions on Russia, kicking some banks out of the SWIFT global payments system.

Meanwhile, on Sunday, Russian President Vladimir Putin ordered his country's deterrence forces — including nuclear arms — onto their highest state of alert.

The U.S. and other Western nations are also sending military aid to Ukraine as Russian forces surround and draw closer to Ukrainian's capital city, Kyiv.

Analysts have said if tensions continue to escalate, gold prices could quickly push back to $2,000 an ounce.

David Madden, market analyst at Equiti Capital, said that in the current environment with so much geopolitical uncertainty, he could see prices pushing to new all-time highs in a few days.

Is gold price at risk of a bigger pullback after $100 swings?

However, some analysts have said that gold still faces a lot of headwinds and volatility is picking up. Last week as Russia invaded Ukraine, gold prices saw an intra-day swing of nearly $100.

Christopher Vecchio, senior market strategist at DailyFx.com, said in a note Sunday that Thursday's intra-day high could mark the peak for gold this year.

"The path for gold prices is clear from here: it's World War 3 or bust. If gold prices are going to run higher from this point, there needs to be a significant escalation in the Russia-Ukraine conflict, ultimately drawing in the European Union, the United States, and more broadly, the NATO alliance," he said in the note. "Otherwise, in an economic environment defined by slowing growth among G7 countries and more hawkish central banks – which is pushing up real interest rates – gold prices are not well-suited to sustain a meaningful rally."
 

By Neils Christensen

For Kitco News

Time to buy Gold and Silver on the dips

 

 

David

Russia-Ukraine conflict - $100 gold price swings and volatility warning

Russia-Ukraine conflict – $100 gold price swings and volatility warning

Gold saw $100 price swings on Russia's invasion of Ukraine. In an initial reaction, gold hit the highest levels since September 2020 but could not hold the gains. After markets received some clarity around new Russia sanctions, gold dropped back below the $1,900 an ounce level. Here's a look at Kitco's top three stories of the week:

3. Dramatic price swings: Gold price sheds $90, silver price sees sharp reversal as analysts warn of more volatility to come

2. Watch palladium, gold, and silver prices as the West sanctions Russia in response to the Ukraine crisis

1. Gold's path to $2k: Fed rate hikes won't hurt gold price rally this year, says Wells Fargo

 

By Anna Golubova

For Kitco News

Time to buy Gold and Silver on the dips

 

 

David

s gold price at risk of a bigger pullback after $100 swings?

Is gold price at risk of a bigger pullback after $100 swings?

After the initial geopolitical shock of Russia's full-scale invasion of Ukraine, gold has retreated below the $1,900 an ounce level. But analysts are still warning of high volatility ahead for the precious metal.

The gold market saw price swings of around $100 during the last couple of trading sessions as markets reacted to the crisis in Ukraine. April Comex gold futures were last at $1,885.40, down 2.12% on the day after hitting a 1.5-year high of $1,976.50 on Thursday.

Analysts point to clarity around sanctions as one of the reasons behind gold's pullback, adding that many were pricing in a much harsher response from the West.

"Some of the extreme political tension is off. We know Putin has invaded Ukraine in a much broader sense than we thought. And prior to that, the belief was that the response would be robust, which could very well include removing Russia from the SWIFT payment system. That didn't happen," TD Securities head of global strategy Bart Melek told Kitco News. "The sanctions, certainly judging by the markets' response, were not as strong and restrictive as they could have been."

One of the more significant outcomes was the energy market not getting hurt by sanctions, which means less oil supply stress.

"Oil prices have come off. Less inflationary expectations and higher real rates are not great for gold," Melek said. "The West is not sanctioning Russian oil or gas exports. And at the same time, we might get more support from OPEC."

On top of that, the West's disagreement over removing Russia from the SWIFT system shows that the severity of response will vary, Gainesville Coins precious metals expert Everett Millman told Kitco News.

 

"The resistance of many EU members to impose harsher sanctions from Russia, such as banning them from the SWIFT system, is part of the reason behind gold's reversal. Now it does seem like Europe is not aligned with the U.S. and Britain to impose the harshest possible sanctions. And that does de-escalate the crisis a bit," Millman said.

Plus, gold's geopolitically-triggered rallies usually run out of steam very quickly, he added. "That's what we saw in 2014 during the annexation of Crimea. I'm not surprised we gave back all the gains so quickly."

However, Melek warned that Russia-Ukraine tensions could reignite at any time. "During war the only thing we can be sure of is not knowing."

And Millman noted that investors should be ready for high levels of volatility going forward. "The focus of the gold market has shifted away from inflation and Fed policy to geopolitics and crisis in Ukraine. I'm expecting a lot more volatility until there is some resolution or diplomatic solution," he said.

Gold price could hit $2,000 'in only a matter of days' – analysts

Can't forget about the Fed

Aside from geopolitical tensions, good news for gold is the repricing of how many rate hikes the U.S. economy will see this year in light of the war in Ukraine.

For example, the Fed's 50-basis-point rate hike in March, which was at an 80% probability before, now is at just 24.8%, said Melek.

"The view here is that central banks may stay accommodative for longer than previously thought," he said. "This idea will support gold. Central banks don't want to remove liquidity when volatility is already elevated. They want to hit inflation hard, but they don't want to collapse the economy either."

Ukraine will be on the Fed's radar during the March decision, added Millman. "The geopolitical situation will likely prevent the Fed from hiking as many times as the markets expect. We'll get at least one rate hike in March. But it could be one and done, or we could see fewer rate hikes this year. I keep hearing 7-9 rate hikes in 2022. That's way too many," he said.

 

Gold's price levels to watch

Analysts are not ruling out a retest of the $1,850 an ounce level just because of how quickly the precious metal went from $1,800 to $1,900 an ounce.

"It is hard to be bullish when there is this much volatility. Even before gold's big move on Thursday, prices had blown past the $1,800 to $1,900 in just one week. I do think that we are due for a retest of some of those lower levels just because the price has moved so much so quickly," said Millman.

Melek is watching $1,860 an ounce on the lower end and $1,916 an ounce on the upper end, as he expects some range-bound trading next week.

 

Data next week

Aside from the focus on Russia's military action in Ukraine, markets will be paying close attention to Fed Chair Jerome Powell's testimony before both the House and Senate banking committees next week.

"[Powell's] hawkish commentary following the January Federal Open Market Committee meeting resulted in market interest rate hike expectations jumping higher with a strong chance of a 50bp interest rate increase priced in by financial markets. We suspect he will be more cautious next week given the financial market nervousness, and this will likely cement expectations for a 25bp rate increase on March 16," said ING chief international economist James Knightley.

On the data front, the U.S. employment report will be critical to watch, with market consensus calls expecting 438,000 jobs added in February.

Tuesday: U.S. ISM manufacturing PMI

Wednesday: U.S. ADP nonfarm employment, BoC rate decision, Beige Book, Powell testifies before U.S. House

Thursday: U.S. jobless claims, ISM non-manufacturing PMI, Powell testifies before U.S. Senate

Friday: U.S. nonfarm payrolls

 

By Anna Golubova

For Kitco News

Time to buy Gold and Silver on the dips

 

 

David