Metals Stocks: Gold falls as hints of progress in Russia-Ukraine talks crimp haven demand
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Gold futures ended at their lowest level in almost two weeks on Tuesday after news reports indicated tentative signs of progress in talks between Russia and Ukraine, crimping demand for traditional safe-haven assets, including precious metals.
“This could be a rough week for gold as renewed peace talks rekindle risk appetite,” said Lukman Otunuga, manager, market analysis at FXTM, in a market update. “An appreciating dollar and rising Treasury yields are likely to rub salt into the wound, sending the precious metal on a slippery decline,” he said. The ICE U.S. Dollar Index DXY, +0.18% and Treasury yields trade higher month to date.
On top of this, the U.S. March jobs report on Friday “could compound gold’s woes if the numbers exceed market expectations,” said Otunuga.
Gold for April delivery GC00, -0.37% GCJ22, -0.41% fell $27.60, or 1.4%, to end at $1,912.20 an ounce on Comex after touching a low at $1,888.30 — the lowest intraday price for a most-active contract since Feb. 25, according to FactSet data. June gold GCM22, -0.37% , which is now the most-active contract, settled at $1,918, down $26.70, or 1.4%. Both contracts settled at their lowest since March 16.
May silver SI00, -0.67% SIK22, -0.67% also fell 46 cents, or 1.8%, to $24.736 an ounce after a $24.045 low — the lowest also since Feb. 25.
Russian news agency TASS quoted Russia’s deputy defense minister as saying the country’s military would “radically reduce” activity outside Kyiv and Chernihiv, according to the BBC. Russian news agencies also quoted Moscow’s negotiators reporting progress after talks with Ukrainian counterparts resumed in Turkey.
There’s a “heavy hint of optimism in the air amidst headlines of potential Putin-Zelensky peace talks, and the Russian military cutting back operations near Ukraine’s capital [of] Kyiv,” said Matthew Weller, global head of research at FOREX.com and City Index, in a market update.
“Traders have taken that hint and are aggressively putting on the so-called ‘peace trade’,” in part driving gold briefly back below $1,900 an ounce, he said.
U.S. benchmark stock indexes traded broadly higher in Tuesday dealings following the reports, dulling some interest in haven gold.
Futures prices for the precious metal also continued to trade lower after a survey of U.S. consumer confidence revealed a rise to 107.2 in March and increased for the first time in 2022.
Also Tuesday, Philadelphia Federal Reserve President Patrick Harker predicted “a series” of increases in a key short-term U.S. interest rate this year and said he is “very open” to a half percentage point hike as the central bank moves to tamp down the worst outbreak in inflation in 40 years.
In other Comex trading, May copper HGK22, +0.18% tacked on 0.1% to $4.731 a pound.
April platinum PLJ22, +0.35% lost 1.8% to $973 an ounce, while July platinum PLN22, +0.15% , which is now the most active, settled at $978.80, down 1.5%. June palladium PAM22, +0.49% ended at $2,112.70 an ounce, down 5.8%.