Gold futures climbed back above $1,900 an ounce on Tuesday, poised to score their highest finish since June, after Russian President Vladimir Putin ordered troop deployments to pro-Moscow, breakaway regions of Ukraine, increasing the threat of a full-scale annexation of the Eastern European country.
climbed $4.20, or 0.2%, to $1,904 an ounce on Comex, after touching an intraday peak at $1,918.30. A settlement around this level would be the highest since June of last year for a most-active contract, FactSet data show. Prices had climbed 3.1% last week — the steepest weekly advance since May of 2021.
“Gold’s performance in the fact of Russia’s moves is, frankly, disappointing and leaves one searching for the rationale,” Brien Lundin, editor of Gold Newsletter, told MarketWatch.
On “the one hand, it’s a fact that the gold price is easily pushed around by futures traders who can create as much ‘paper gold’ as needed to achieve their goals, without any restraint from the physical markets,” he said. “So there may not be much to interpret from gold’s lack of response other than traders taking advantage of events.”
“On the other hand, it is possible that the gold market had already recognized Putin’s move as a fait accompli with the latest price rally, and any further gains would be contingent on an escalation that is perceived as unlikely,” said Lundin.
Putin’s order sending troops comes after Russia earlier said it was recognizing the independence of separatist factions in Donetsk and Luhansk, breakaway areas in Ukraine’s Donbas region.
The threat of a Russian invasion of Ukraine has ratcheted up tensions between Moscow and the U.S. and its allies, helping to underpin gains in precious metals, which are perceived as havens during geopolitical conflict. Gold values on Thursday hit their highest levels in about eight months, but ended lower on Friday, heading into the three-day weekend, with U.S. markets closed in observance of Presidents Day.
The moves by Putin drew a swift rebuke from the international community.
Germany took steps to halt an important natural gas pipeline, Nord Stream 2, and the White House said that President Joe Biden would issue sanctions against Moscow.
Meanwhile, officials from the European Union described Putin’s latest actions and statements as “a blatant violation of international law.”
Gold is now awaiting further developments in the Ukraine crisis, Jeff Wright, chief investment officer at Wolfpack Capital, told MarketWatch. “There are a lot of unknowns at this stage.”
Gold could “respond and accelerate quickly toward $1,950 with a serious escalation in the Ukraine and well beyond $2,000 with any attack on an actual NATO member such as the Baltic countries of Estonia, Latvia, Lithuania,” he said. “At the same time, gold could quickly retreat, probably back towards $1,800 if the crisis is diffused quickly and Russian forces pulled back,” but this appears unlikely, he said.
Elsewhere on Comex, silver for March delivery
traded at $24.295 an ounce, up 1.2%, after putting in a weekly rise of 0.3% on Friday.
lost 0.3% to $4.507 a pound.