Gold down as USD hovers near a 25-month high

London (April 27) Metal commodities were considerably subdued on Wednesday morning, with gold, silver, palladium and platinum all down as the US dollar (USD) continued to strengthen, soaring to almost 25-month highs. This was further buoyed by China announcing that it would be upping infrastructure spending, in an attempt to counter demand worries.

However, precious metals received a floor on prices, following reports of the Russia-Ukraine conflict taking a fresh turn, with European gas wars at the forefront as Russia stops gas supplies to Bulgaria and Poland, following their refusal to pay for them in roubles. This has led to considerable anxieties about geopolitical uncertainty, if the war escalates further.

According to Piero Cingari, an analyst at Capital.com: “After days of steep declines in industrial metals, particularly palladium group metals (PGMs), copper, and aluminium, on concerns about Chinese domestic demand being impacted by lockdowns, prices have seen some relief in the last few hours following the announcement by the Chinese government that it will push for an infrastructure spending campaign, describing it as ‘an important support for economic and social development’.

Cingari further highlights: “Sentiment in precious metals remains subdued. Gold is trading at the critical support level of $1,890 per troy ounce, while silver has retraced to levels seen in mid-February. Much will rely on how US Treasury yields behave in the coming days.

“A decline in yields as a result of growing economic concerns, and a potential repricing of Fed rate rises, might provide breathing room for precious metals.”

In London morning trading, Spot gold inched lower 0.23% to $1,901.03 per troy ounce, eroding the gains seen in the previous trading session, following the US dollar (DXY) reaching close to a 25-month high. This put significant pressures on greenback-priced bullion.

Capitol.com