Sat, May 18, 2024

Gold Prices Drop as Putin and Biden Agree to Discuss Ukraine

Gold

Gold prices fell $1,893 from $1,909 during Monday’s APAC trading session. It happened after French media said that Joe Biden and Vladimir Putin agreed to hold a summit about the Ukraine crisis. This fact brings hope that these leaders might manage to resolve the dispute diplomatically. This news calmed demand for safety and drained the appeal of gold, perceived as a haven asset.

In the meantime, Sergei Lavrov, Russian Foreign Minister, and Antony Blinken, US Secretary of State, will meet this week to discuss the Ukraine situation. The talk might also help market concerns if constructive progress goes well.

Overview of the Gold and Biden decisions

Last Friday, Joe Biden warned about a coming Russian invasion after reports showed growing outbreaks of violence and ceasefire violations. He also said that Russia might attack numerous Ukrainian cities, including Kyiv. He added to worries about escalating geopolitical threats and turmoils in the supply of fuel, food, and other necessities in Eastern Europe.

Fed officials described a moderate view about Fed tightening recently, backing launch in March. Without seeking a supersized interest rate hike or a move in between scheduled policy meetings, it would happen. This went opposite of hawkish comments by James Bullard ( St. Louis Fed President). He argued for a faster pace of tightening to rein in inflation. As a result, the implied probability of interest rate hike at the March meeting has dropped to 15.4% from 49.3% a week ago. The result is according to CME’s FedWatch tool. A moderated view of the March rate hike eased pressure on gold as a non-interest-bearing.

SPDR Gold Trust (GLD) – the world’s largest gold ETF saw two straight weeks of net inflow in February. The number of GLD shares outstanding increased by 1.7 million last week, after rising 2.8 million in the previous week.

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