Gold rallies to multi-month high, eyeing $1,900 amid geopolitical tensions

2.18.22 - Gold Rallies to Multi-Month High, Eyes $1,900

Gold last traded at $1,897 an ounce. Silver at $23.97 an ounce.

NEWS SUMMARY: Precious metal prices steadied near 8-month highs despite a firmer dollar. U.S. stocks retreated, heading for a second consecutive losing week as the Russia-Ukraine conflict loomed.

FX Street--"Gold built on the previous day's positive move and gained strong follow-through traction for the second successive day on Thursday. The momentum extended through the early European session and pushed spot prices to the $1,890 area, or the highest level since June 2021 in the last hour.

A flood of contradicting headlines amid intensifying Russia-Ukraine conflict continued weighing on investors' sentiment, which was evident from a generally weaker tone around the equity markets. This, in turn, was seen as a key factor that underpinned the safe-haven.

Russian media reported earlier this Thursday that the Ukrainian military forces fired mortars and grenades in four Luhansk People's Republic (LPR) localities. The LPR is located in the Donbas region, a territory internationally recognized to be a part of Ukraine but run by Russian backed separatists.

Ukraine, however, denied shelling separatists' territory, suggesting that this could be the false flag that Russia is trying to put out to set a pretext for an imminent invasion. That said, the Organization for Security and Co-operation (OSCE) in Europe has recorded multiple shelling incidents along the line of contact in the East Ukraine in the early hours of Thursday.

The risk-off impulse, along with less hawkish FOMC minutes, showing that policymakers are not set on a particular pace of interest rate hikes, led to a sharp pullback in the US Treasury bond yields. This provided an additional boost to the non-yielding gold.

The upward trajectory took along some short-term trading stops placed near the $1,877-$1,879 region. Hence, the latest leg up could further be attributed to some technical buying, which might have already set the stage for a move towards reclaiming the $1,900 mark."