Gold Secures its Best Week in Nearly Two Years Amid Russia-Ukraine Escalation
Last week, precious metals and stocks notched weekly losses amid elevated Treasury yields and uncertainty regarding interest rate cuts. This week, gold and silver were largely driven by geopolitical concerns, while Wall Street investors also eyed quarterly earnings reports from major tech companies.
Gold started the week around a two-month low of $2,585 and jumped by over 2% on Monday, with safe-haven support coming from buyers concerned about a potential escalation in the Russia-Ukraine conflict. Elsewhere, stocks were mixed throughout Monday’s trading, as global tensions caused oil prices to spike.
U.S. equities vacillated between gains and losses again on Tuesday, as geopolitical concerns weighed on investor sentiment. Cause for concern increased following news that President Biden approved Ukraine’s use of U.S.-made missiles for strikes inside nuclear-armed Russia. As a result, a risk-off sentiment prevailed on Wall Street, leading to a mixed day of trading in which the Dow Jones Industrial Average would end its fourth straight session in the red.
Meanwhile, gold breached $2,630 for the first time in nearly two weeks, on Tuesday while silver dipped to $31.05 an ounce. Wednesday saw a continuation of the same trend, as gold jumped by 1% to a closing price of $2,650. Further gains for the yellow were capped by USD strength. On the same day, the Dow managed to snap its four-session losing streak with a modest 0.3% gain. Other averages were mixed on Wednesday, as investors awaited the release of quarterly earnings data from chipmaker, Nvidia.
On Thursday, the much-anticipated Nvidia earnings were released, which beat targets. However, despite the better-than-expected fiscal third-quarter results, the chipmaker’s forecast called for a more conservative fourth quarter in terms of earnings, which contrasted some of the bullish sentiment surrounding Nvidia. Stocks were again mixed following the Nvidia news, while Bitcoin rose to a fresh all-time high just above $99,000.
Safe-haven demand continued to support bullion on Thursday, as gold rose 0.8% to a one-week high of $2,689 and its fourth consecutive daily uptick. Gold’s momentum continued this morning when the yellow metal breached $2,700 for the first time in two weeks, as safe-haven flows outweighed dollar strength.
Precious metals were also aided by rate cut news, as data from the CME FedWatch Tool indicated that there is a 54% chance of a 0.25% rate cut at the Fed’s December meeting. As a result, gold notched a 4.8% weekly uptick for its best week in nearly two years. While silver lagged when compared to gold, the gray metal secured a 2% weekly gain at $31.29 an ounce.
U.S. equities also managed to end the week in the green. Most notably, the Dow closed at a fresh record today, of 44,296.51. Meanwhile, the tech-heavy Nasdaq Composite turned in a 1.7% weekly uptick as downturns for Alphabet and Nvidia shares capped further gains for the index.