Russia-Ukraine war: Gold stays steady after biggest weekly drop

Gold prices remained stable on Monday after posting its biggest weekly drop since June as investors weighed monetary policy tightening in the US against the impact of Russia’s war in Ukraine.
 

The metal fell 3.4 per cent last week as the Federal Reserve raised interest rates for the first time since 2018. Several officials urged a faster pace of policy tightening to curb the hottest inflation in 40 years.
 

Elevated interest rates typically weigh on non-interest bearing gold. Traders are also weighing mixed messages on the war.

Ukraine rejected a Russian demand to surrender the embattled port city of Mariupol, and an adviser to the Ukrainian president said Russian forces are using “more destructive artillery.”
 

Gold a haven asset has been aided by the conflict and the resulting threats of accelerating inflation and slowing growth.
 

“The main fundamental driver that is still supporting gold prices to potentially trade higher in the medium term continues to be the stagflation risk,” said Kelvin Wong, an analyst at CMC Markets in Singapore. “The Fed has so far failed to cool down future inflationary expectations.”