Gold above $2,000 as a safe haven; Nickel up over 20%

Gold at highest since August 2020 in Russia-Ukraine war; Oil surges to 2008 peak as US and Europe mull over Russian imports

Gold at highest since August 2020 in Russia-Ukraine war; Oil surges to 2008 peak as US and Europe mull over Russian imports

Gold climbed to its highest level in a year and a half on March 7 and palladium hit an all-time high in terms of safe-haven asset attractiveness, while nickel surged over 20% on fears of supply disruptions related to sanctions against Russia and further fought Ukraine.

Gold prices surged above $2,000 an ounce, palladium hit a record, LME 3-month nickel posted its biggest one-day gain ever, and oil and wheat surged to 14-year highs as Russia’s escalating invasion of Ukraine hit global commodities further affected.

The searing rally in commodity prices has raised concerns about economic growth in countries still recovering from the COVID-19 pandemic.

“The adage goes that high prices are the best cure for high prices,” OANDA senior analyst Jeffrey Halley said in a report.

“Unfortunately, that’s not true in a stagflationary environment. I suspect that growth forecasts for 2022 will need to be revised down sharply around the world and it will be interesting to see what central banks around the world do.”

Stagflation refers to countries experiencing a simultaneous rise in inflation and faltering economic output.

Spot gold was up 1% to $1,986.29 an ounce (05:20 GMT) after rising to the start of the session at $2,000.69, the highest since August 19, 2020.

Fighting prevented about 2,00,000 people from evacuating the besieged Ukrainian city of Mariupol for the second straight day on March 6, as Russian President Vladimir Putin vowed to press ahead with his invasion if Kyiv does not surrender.

Holdings of the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, rose 0.4% on Friday to 1,054.3 tonnes — the highest since mid-March 2021.

Palladium is up 5.6% to $3,170.49 an ounce after hitting an all-time high of $3,172.22 earlier in the session.

Russia accounts for 40% of global production of the metal, which automakers use in catalytic converters to reduce emissions.

Industrial metals also rose, led by strong gains in nickel, which rose more than 20% as global supply chains tried to price in potential shortages of supplies from Russia, the third largest nickel producer.

Chinese iron futures also gained ground, with iron ore hitting a six-month high after a gloomy economic outlook over the weekend boosted expectations for more infrastructure spending in the world’s second-largest economy.

Oil prices rose more than 6%, hitting their highest level since 2008, as the United States and European allies mull over a Russian oil import ban and delays in Iran’s potential return of crude to global markets fueled supply fears.

Brent crude was up $8.46, or 7.2%, to $126.57 a barrel by 0128 GMT, while US West Texas Intermediate (WTI) crude was up $7.65, or 6.6%, to $123.33 rose.

Chicago wheat futures rose more than 5% to hit a 14-year high as traders continued to assess the impact of potential off-limit supplies from Russia, the world’s largest wheat exporter, and restricted production and supplies from Ukraine.

With Ukrainian ports closed and operators reluctant to trade Russian wheat amid Western financial sanctions, buyers are scrambling to find alternative suppliers.

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