Metals Stocks: Gold edges higher to kick off week

Gold futures edged higher Monday, bouncing after last week’s pullback as investors monitored developments in the Russia-Ukraine war, shaking off a further rise in Treasury yields and a slightly stronger dollar.

Gold for June delivery GC00, +0.52% GCM22, +0.52% rose $10.40, or 0.5%, at $1,934.10 an ounce after falling 1.6% last week. May silver SIK22, +0.77% was up 18.1 cents, or 0.7%, at $24.835 an ounce after posting a weekly loss of almost 3.8% on Friday.

Analysts said gold may be finding some haven-related buying interest after a weekend of grim headlines and images out of Ukraine as Russian forces pulled back from the capital, Kyiv.

So far, the bodies of 410 civilians have been found in towns near the capital that were recently retaken from Russian forces, said Ukraine’s prosecutor-general, Iryna Venediktova. The images prompted several European leaders to call for tougher sanctions against Moscow.

“On the macro front, the war in Ukraine is still one of the main market drivers, of course, but investors are also paying a lot of attention to inflation,” which continued to run hot in the U.S. and Europe, said Carlo Alberto De Casa, external market analyst at Kinesis Money, in a note.

Gold was gaining ground, even as Treasury yields resumed a push to the upside and the ICE U.S. Dollar Index DXY, +0.24%, a measure of the currency against a basket of six major rivals, edged up 0.2%. Higher yields can be a negative for gold, raising the opportunity cost of holding nonyielding assets. A stronger dollar can also be a negative for commodities priced in the unit, making them more expensive to users of other currencies. 

Gold, meanwhile, “has failed to surpass the resistance zone of $1,950 but has managed to remain above the support zone of $1,890-$1,900 and the precious metal has started the new week moving laterally between $1920 and $1,930,” De Casa wrote.

“From a technical point of view, a break above or below these levels would offer a first directional signal to investors,” he said.

From a technical point of view, a break above or below these levels would offer a first directional signal to investors.

There are now good chances that the Federal Reserve might hike rates by 50 basis points (from 0.50% to 1%) in May.

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