Gold Crosses $1,975 Per Ounce

(February 24th, 2022 - Barani Krishnan , Reuters)

Investing.com -- Gold hit 13-month highs above $1,975 an ounce on Thursday but its rally may have also hit a ceiling as the West’s response to Russia’s invasion of Ukraine appeared to contain some of the geopolitical risks that sent the yellow metal soaring.

Gold’s most active contract on New York’s Comex, April, settled up $15.90, or 0.8% at $1,926.30 an ounce after surging to a January 2021 high of $1,976.20.

But in after-hours trade, it surrendered all of those gains, sliding more than $18 on the day, or almost 1%, to hover at around $1,892.

Gold sank as U.S. bond yields jumped as the 10-year Treasury note went from its 1.846% low of the day to a high of 1.975%, with investors rediscovering their risk appetite.

Wall Street’s S&P 500 and Nasdaq indexes also returned to the positive from a 2% loss earlier in the day.

The turnaround in risk wiped out some of the haven allure that took gold to $1,900 levels this week.

“The moment the 10-year took off and stocks did as well, gold lost some of the bubbling shine that had built up in recent days,” said Phillip Streible, precious metals strategist at Chicago’s Blue Line Futures.

In renewed sanctions on Moscow, President Joe Biden restricted international access for five major Russian banks, including VTB; froze Russian assets in America, and curtailed Russia's ability to import key technology needed for military and industrial upgrades.

Gold took off in recent weeks from the combination of runaway inflation and fears about the impact of U.S. and other Western sanctions on Russia.

On the inflation front, the U.S. Consumer Price Index expanded by 7.0% in the year to December, its most since 1982.

The U.S. economy, in comparison, grew by 5.7 percent in 2021, its fastest since 1984, from a 3.5% contraction in 2020 caused by the coronavirus pandemic.

The Federal Reserve slashed interest rates to almost zero after the outbreak of the coronavirus pandemic in March 2020. It is expected to resort to a series of rate hikes this year to counter inflation.