Gold Whipsaws as Russia Says No Plan Yet for Biden-Putin Summit
Gold whipsawed after Russia said there are “no concrete plans” for a summit between Vladimir Putin and U.S. President Joe Biden.
(Bloomberg) -- Gold advanced after Russian President Vladimir Putin signed a decree recognizing the self-proclaimed separatist republics in eastern Ukraine, intensifying a standoff with the West.
Bullion swung between gains and losses over the day, earlier falling as much as 0.6% after statements from Washington and the Elysee that said both the U.S. and Russia had agreed to the summit proposed by French President Emmanuel Macron. Moscow later denied their were “concrete plans” to meet.
Shortly after the week’s trading began, gold rose to the highest since June after the U.S. told allies that any Russian invasion would potentially see it target cities beyond Ukraine’s capital, Kyiv. Moscow, which has repeatedly denied it plans to invade, said over the weekend that its forces would remain in Belarus indefinitely.
Gold has rallied this month as simmering geopolitical tensions between Ukraine and Russia drive haven demand. Concerns about Moscow’s troop build-up near the borders of its smaller neighbor have sparked renewed inflows into gold-backed exchange-traded funds, while money managers trading the Comex have also boosted their net long bets to a three-month high.
“Further gold strength cannot be ruled out for now -- a move beyond $1,900 is likely to be amplified in the short term by momentum buying” and fearing-of-missing-out trades, UBS Group AG analyst Joni Teves wrote in a note. “Such a move is likely to put the focus next on the $1,920 and $1,950 areas.”
The geopolitical tensions have outweighed bearish sentiment from the prospect of the U.S. Federal Reserve’s first rate rise in March, which could damp demand for the non-interest bearing precious metal by pushing up Treasury yields. Comments last week by Governor Lael Brainard and New York Fed President John Williams, as well as Chicago Fed chief Charles Evans, showed officials eager to get tightening under way, without seeking a super-sized interest-rate hike or a move before the next scheduled meeting.
Gold added 0.4% to $1,905.23 an ounce at 3:46 p.m. in New York, after earlier rising to $1,908.34, the highest since June 3. The Bloomberg Dollar Spot Index was little changed. Silver, platinum and palladium gained.
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