Commodity Market: Gold eases from a 36-week peak on prospect of U.S.-Russia negotiations regarding Ukraine

Spot Gold eased from a fresh 36-week high on Friday, as prospects of a Russia-US meeting next week cooled demand for haven assets.

However, the Ukraine standoff has put the metal on course for a third straight week of advance.

Yesterday the yellow metal rose above the $1,900 mark for the first time since last June, following reports of Ukraine tension escalating that triggered a rush to safe haven assets.

Yet, sell-off in Asian equities eased and US stock futures rebounded after the US Secretary of State agreed to meet with Russia’s foreign minister next week provided Russia avoids an aggressive move against its neighbor.

“Gold is benefiting from higher inflation and a weaker U.S. dollar. Escalating Ukraine-Russia tension is enhancing the safe haven appeal of gold,” ANZ bank analysts wrote in an investor note.

“Elevated inflation is pushing real rates further into negative territory, which broadly protects the downside for gold in the short term. Nevertheless, this could be offset by aggressive rate hikes by the Fed.”

As of 8:57 GMT on Friday Spot Gold was edging down 0.14% to trade at $1,895.54 per troy ounce. Earlier in the trading session the yellow metal rose as high as $1,902.54 per troy ounce, which has been its strongest price level since June 11th 2021 ($1,903.12 per troy ounce).

The commodity looked set to register its third consecutive week of gains, while being up 1.82%.

Meanwhile, Gold futures for delivery in April were edging down 0.33% on the day to trade at $1,895.70 per troy ounce, while Silver futures for delivery in March were up 0.33% to trade at $23.953 per troy ounce.

The US Dollar Index, which reflects the relative strength of the greenback against a basket of six other major currencies, was inching down 0.01% to 95.795 on Friday. Earlier this week the DXY went up as high as 96.435, which has been its strongest level since February 1st (96.722).

Near-term investor interest rate expectations were little changed. According to CME’s FedWatch Tool, as of February 18th, investors saw a 32.7% chance of the Federal Reserve raising interest rates to the 0.50%-0.75% range at its policy meeting on March 15th-16th, compared to a 35.6% chance on February 17th.

Daily Pivot Levels (traditional method of calculation)

Central Pivot – $1,889.09
R1 – $1,910.28
R2 – $1,922.36
R3 – $1,943.55
R4 – $1,964.75

S1 – $1,877.01
S2 – $1,855.82
S3 – $1,843.74
S4 – $1,831.67