As gold futures settled Monday, U.S. benchmark stock indexes fell, with the Nasdaq down roughly 1.9% and the Dow Jones Industrial Average dropping 1.7%
Gold futures on Monday ended higher, as brewing international tensions and a downturn in risk assets supported buying in the precious metal that is perceived as a haven.
Gold is clearly finding favour as portfolio insurance, with the Nasdaq Composite Index down by around 15% from November’s record, said Adrian Ash, director of research at BullionVault.
As gold futures settled Monday, U.S. benchmark stock indexes fell, with the Nasdaq down roughly 1.9% and the Dow Jones Industrial Average dropping 1.7%.
Against that backdrop, February gold jumped $9.90, or 0.5%, to settle at $1,841.70 an ounce, following a 1.1% weekly advance for the precious metal.
Meanwhile, silver for March delivery shed 52 cents, or 2.1%, to end at $23.80 an ounce, after it put in a weekly advance of 6.1% to end trade on Friday.
Geopolitics is on the front burner of the marketplace at present, which is causing some anxiety among traders and investors, said Jim Wyckoff, senior analyst at Kitco.com, in a daily note.
Russia appears poised to invade Ukraine, despite the West’s efforts to dissuade Russian President Vladimir Putin by threatening sanctions, he said.
The move for gold also comes as the Federal Reserve was slated to kick off an important gathering on Tuesday and Wednesday to lay out the framework for tightening monetary policy to combat rising inflation pressures.
Expectations are that the Fed this week will set the stage for raising interest rates, which currently stand at a range between 0% and 0.25%, as many as three times in 2022 to rein in inflation.
Evangelista, however, said that the Fed meeting contains further downside risk for gold buyers, which could at least cap any significant moves higher, despite the bullish backdrop for precious commodities.