Gold heads for weekly rise on safe-haven demand

FILE PHOTO: Marked ingots of 99.99 percent pure gold are placed in a cart at the Krastsvetmet non-ferrous metals plant in Krasnoyarsk
FILE PHOTO: Marked ingots of 99.99 percent pure gold are placed in a cart at the Krastsvetmet non-ferrous metals plant in the Siberian city of Krasnoyarsk, Russia March 10, 2022. REUTERS/Alexander Manzyuk/

March 25, 2022

By Brijesh Patel

(Reuters) – Gold was on course to gain for the week as concerns over the war in Ukraine and rising prices boosted its appeal as a safe-haven and an inflation hedge, but prices eased on Friday as U.S. Treasury yields reached new highs.

Spot gold XAU= fell 0.1% to $1,956.19 per ounce by 12:44 p.m. ET (1644 GMT).

U.S. gold futures GCv1 fell 0.3% to $1,955.70.

Helped by expectations of monetary tightening by the U.S. Federal Reserve, yields on the U.S. 10-year Treasury note US10YT=RR firmed near multi-year highs, increasing the opportunity cost of holding zero-yield bullion. US/

“If interest rates do continue to rise at a quick pace that could limit the upside in precious metals,” said Chris Gaffney, president of world markets at TIAA Bank. .N MKTS/GLOB

“However, overall tone of the market is still supportive of precious metals. There is safe-haven buying and also as an inflation hedge on the retail side. We’re seeing clients coming in wanting to add the diversification of gold to their portfolios,” Gaffney said. GOL/ETF

The Fed raised borrowing costs for the first time in three years last week, and traders are pricing in a probability of a 50 basis points rate hike during the Fed policy meeting in May. FEDWATCH

Gold, seen as a safe investment during times of political and financial uncertainty, has risen about 1.8% this week as investors try to shield against the impact of the war in Ukraine and higher oil prices that threaten global growth.

“Don’t be surprised to see some safe-haven and bargain buying surface,” said Jim Wyckoff, senior analyst at Kitco Metals in a note.

Spot silver XAG= fell 0.3% to $25.44 per ounce, but was on track for a weekly rise of about 2%.

Platinum XPT= dipped 1.7% to $1,002.80 per ounce, and palladium XPD= was down 5.7% at $2,380.20, both set for their third weekly dip.

(Reporting by Brijesh Patel in Bengaluru; Editing by Vinay Dwivedi)