Gold held steady after registering its highest quarterly gain in almost two years, as Russia’s war in Ukraine, inflation fears, and global economic worries bolstered its attractiveness as a safe haven asset.
The new quarter begins with the resumption of bilateral discussions between the two countries on Friday, as well as the publishing of the monthly U.S. employment data. Bullion is still on track for a weekly loss, as traders evaluate the likelihood of a faster pace of interest rate rises in key nations. Price pressures are being addressed by central banks as a result of a war that has interrupted commodities shipments.
Inflation-adjusted consumer spending in the United States fell in February, indicating that the sharpest price hikes in four decades are starting to cool demand. The personal consumption expenditures price index, which the Federal Reserve uses to determine inflation, rose 6.4 percent from a year ago, the highest level since 1982.
As investors seek a safe haven from rising prices and geopolitical uncertainties, monthly inflows into gold-backed exchange-traded funds have reached their highest levels since 2016. Still, there are some headwinds, since Wall Street’s major banks are banking on the Fed tightening monetary policy considerably more aggressively than they projected just weeks ago. Higher interest rates usually put a strain on non-interest-bearing precious metals.
“A positive nonfarm payroll release this evening might increase bond rates and the greenback once again, putting negative pressure on gold,” said Jeffrey Halley, a senior market analyst at Oanda Corp. “Gold might hit $1,880 in the coming week, potentially as low as $1 800.”
At 12:17 p.m. in Singapore, spot gold was up 0.1 percent at $1 939.21 an ounce, after increasing 5.9% in the first quarter, the highest since the three months ended June 30, 2020. After rising 0.3 percent the previous day, the Bloomberg Dollar Spot Index gained 0.1 percent. Palladium, platinum, and silver have all made significant progress.