Gold declines over positive shift in Ukraine crisis

GOLD PRICES RE TREATED FROM ITS OVER $2,000 PER OUNCE VALU ATIONS AS RISK SENTIMENT welcomed a slight boost following President Vladimir Putin’s recent comments hinting on a progressive dialogue with Ukraine.

Market dealers observed that the development softened the demand for the safe-haven asset that was further pressured by bets on higher U.S. interest rates.

Spot gold shed 1.1 percent to $1,973.80 an ounce, but still settled for a weekly rise of about 0.3% percent, while the U.S. gold futures lost 0.9 percent to $1,981.80 an ounce.

Commenting on gold’s current direction, David Meger, director of metals trading at High Ridge Futures, opines that many positive fundamental factors, like inflation and supply chain disruption still remain favourable for the yellow metal in the long term.

Meger, however, asserted that a good amount of the “positives” might have been priced into the market, adding that the recent moves were a correction off recent highs.

“The market’s obviously pricing in subsequent rate hikes. But the path of those rate hikes is clearly what the market will be focused on, moving forward,” he added.

On his part, Ole Hansen, commodity analyst at Saxo Bank, said the Russia-Ukraine crisis will continue to support the prospect for higher precious metal prices while the market will be tested by inflation and central banks’ rate hike expectations.

Meanwhile, benchmark U.S. 10year Treasury yield soared, raising the opportunity cost of holding non-yielding bullion, while equities extended gains as concerns over the course of the Ukraine conflict kept investors on their toes.

The week also ended on a bearish note for other precious metals as spot palladium was down 5.6 percent to $2,764.19 per ounce, losing about 7.8 percent in the week, despite hitting a record high earlier in the week, driven by concerns over supply disruption from topproducer Russia.

Silver dropped 0.5 percent to $25.76 per ounce, while platinum lost 0.1 percent to $1,069.80 per ounce.

QUOTATIONS FOR GLOBAL FOOD COMMODITIES SWUNG TOWARDS AN ALL TIME high in February, led by vegetable oils and dairy products, according to the Food and Agriculture Organisation (FAO) of the United Nations.

The FAO food price index which tracks monthly changes in the international prices of commonlytraded food commodities averaged 140.7 points in February, 3.9 percent higher than 135.7 points recorded in January, and was up 20.7 percent year-on-year.

Details highlighted in the report, however, partly incorporated market effects stemming from the Russia-Ukraine crisis as the international food agency explained that sustained global import demand and reduced exports led to a sharp rise in the vegetable oils price index.

The surge was also attributed to other supply factors, including a decline in palm oil export availability in Indonesia, lower soybean production prospects in South America and lower sunflower oil exports due to conflict in the Black Sea region.

Upali Galketi Aratchilage, an economist at the FAO, noted that concerns over crop conditions and adequate export availability explain only a part of the current global food price hike.

Aratchilage explained that a much bigger push for food price inflation wasn’t particularly from food production, noting that the energy, fertiliser and feed sectors, which tend to squeeze profit margins of food producers, discouraged producers from investing and expanding production.

The overall rise for February was driven by an 8.5 percent increase in the FAO vegetable oils price index, a new record high.

This, according to the FAO, was mostly due to sustained global import demand, which coincided with a few supply-side factors, such as lower soybean production prospects in South America.