Gold futures on Monday morning were trading slightly higher, following the sharpest weekly decline for bullion since November, a slide that helped to bring the commodity’s value to a six-week nadir.
“The precious metal suffered a sharp reversal in fortunes last week, going from challenging $1,850 an ounce to sinking below the psychologically important threshold of $1,800,” wrote Rupert Rowling, market analyst at Kinesis Money.
April gold GC00, +0.49% GCJ22, +0.49%, which is now the most-active futures contract, was rising $4.90, or 0.3%, to trade at $1,791.50 an ounce. after logging a 2.5% weekly decline on Friday and marking the lowest settlement since Dec. 15 based on a most-active contract, according to Dow Jones Market Data.
“The two main drivers of the market this week are likely to have a contrasting impact on gold,” the analyst wrote.
Bullion has been supported by concerns about conflict between Ukraine and Russia, but those tensions have been seen subsiding somewhat.
“Any sign of further escalation in tensions over Ukraine is likely to be supportive for gold as investors seek out haven assets in a flight to safety,” wrote Rowling.
However, the prospect of rising rates across the globe have served as a headwind for nonyielding precious metals such as gold and silver.
Atlanta Federal Reserve President Raphael Bostic told the Financial Times that a 0.50 percentage point increase to benchmark federal funds could be warranted if inflation pressures continue to intensify, comments that may help to bolster the belief that the central bank may need to be aggressive to tamp down pricing pressures. Market-based projections are already pointing to three or four interest-rate increases of 25 basis points in 2022.
Other central banks, including the U.K.’s, also are expected to lift their benchmark rates, which will weigh on demand for bullion.
“While the Bank of England’s likely rate hike would be detrimental for gold as it would be further confirmation that global interest rates are on the rise, making the non-yield bearing asset of gold less attractive,” the Kinesis Money analyst wrote.
Silver for March delivery SIH22 added 25 cents, or 1.1%, to around $22.55 an ounce, following a 8.3% weekly decline put in on Friday.