Metals Stocks: Gold ends above $2,000 but holds just below an all-time high

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Gold futures jumped above $2,000 an ounce on Tuesday, extending its rise toward record-high levels, as the war in Ukraine fueled bids for safe haven assets like bullion.

Meanwhile, palladium prices reached an all-time high as the Ukrainian crisis in its second week, prompted a surge higher in the broad commodity complex.

April gold
GCJ22,
+2.83%

 
GC00,
+2.83%

rose $69.50, or 3.5%, to $2,065.40 an ounce, following a 1.5% advance on Monday, which has put bullion at around the highest level in about nearly 19 months, hitting a Tuesday peak at $2,070.40.

“The rally in gold has been accelerating since the Russia/Ukraine tensions began to escalate in earnest back in February, and renewed fears about stagflation are further supporting the gains,” analysts at Sevens Report Research wrote in Tuesday’s newsletter.

“With real rates dropping sharply from recent highs and market-based inflation expectations at new highs, the backdrop for gold is decidedly bullish,” they said.

Gold prices are also closing in on their highest settlement on record, which was at $2,069.40 on Aug. 6, 2020, according to Dow Jones Market Data. The record intraday level was seen on Aug. 7, 2020 at $2,089.20.

Despite the rally in gold, some market participants are skeptical about the continued upside in the precious metals. At least one strategist speculated that restrictions on purchasing crypto, such as bitcoin, would prompt Russia’s central bank to dump a chunk of its reserves of gold to get cash.

“The Bank of Russia, for the most part, has no other means but to sell off the gold from its reserves in Russia. These steps could be taken tomorrow, as Monday and Tuesday were national holidays [in Russia],” wrote Alex Kuptsikevich, a senior financial analyst at FxPro, in a Tuesday note.

Thus far, gold prices, and those for other precious metals, have been buttressed by doubts about central bankers’ ability to limit the rise in inflation in the face of the geopolitical tensions.

“Investors are liquidating their positions in risky assets and are hesitant to pump more capital into equity markets,” wrote Naeem Aslam, chief market analyst at AvaTrade, in a research note. “These dynamics have pushed the price of the yellow metals towards $2,000.”

Meanwhile, futures for palladium topped $3,000, with the white precious metal gaining $182.1, or 6.3%, to $3,084 an ounce to carve out a fresh all-time high.

“While sanctions have not hit Russian producers yet, bans on flights to and from Russia make it hard to get palladium and other products out of the country,” said Peter Grant, vice president and the senior metals strategist at Zaner Metals and Tornado Precious Metals Solutions, in a Tuesday newsletter. “Sanctions on Russian banks have also made it difficult for producers to receive payment.”

A retreat in the dollar, down 0.3%, from a 2020 peak, as measured by the ICE Dollar Index
DXY,
-0.21%
,
also was helping to support purchases among overseas buyers.

May silver
SIK22,
+5.50%

added 6.1% to $27.29 an ounce, while May copper
HGK22,
+0.36%

edged up by 0.4% to $4.748 a pound. April platinum
PLJ22,
+5.53%

traded at $1,185 an ounce, up 6.1%.

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