Gold futures rebounded on Wednesday (21st) from the lowest levels since April 2020, despite the fact that the Federal Reserve (Fed) has raised interest rates three times in a row by 3 yards (75 basis points), but due to the partial mobilization order ordered by the President of Russia. Vladimir Putin He expressed that he would not hesitate to use nuclear weapons, and the Russian-Ukrainian war situation escalated accordingly. Under the support of a small amount of demand for a safe haven, precious metals rose one after the other.
Gold futures for December delivery settled up $10.60, or 0.6%, at $1,681.70 an ounce in New York, rebounding from the lowest level since hitting April 2020 on Tuesday.
Two hours after the Fed’s decision was announced, around 4:12 pm ET, gold sustained gains, up 0.7% to $1,673.86 an ounce.
Putin issued a partial mobilization order earlier on Wednesday to recruit 300,000 reservists to the battlefield. It is the first time Russia has issued such an order since World War II, and he said it will do everything possible to defend Russian territory to be condemned.
William Masters, senior sales trader at Saxo Markets UK, said: “People originally thought the Fed’s decision was the most important event on Wednesday, but Putin’s partial mobilization order sent the market into turmoil.”
However, gold’s gains were relatively small, as the appreciation of the dollar and a sharp rise in US bond yields suppressed gold’s gains. The former would weigh on dollar-denominated goods, while the latter would raise the opportunity cost of holding gold.
Raffi Boyadjian, chief investment strategist at XM, said this week was a great central bank week, and after the Fed, the United Kingdom, Japan, and the Swiss central bank announced decisions, so investors are avoiding adjusting their positions suddenly before that. Unless there is a new development in the Russian-Ukrainian war, geopolitical factors will still not override Fed decisions.
The Fed on Wednesday announced three consecutive rate hikes of 3 yards (75 basis points) and signaled that more rate hikes could be on the way.
Gold futures closed half an hour before the Fed’s 2:00 decision. Gold spot prices fell immediately after the decision announcement, but quickly reversed course and rose more than 1%.
David Meger, director of metals trading at High Ridge Futures, said a rise in the 3 yard rate was already expected in the market, which saw gold prices rebound sharply from their lows.
Rupert Rowling, market analyst at Kinesis Money, said: “Compared to a few months ago, a Fed rate hike has become a conservative option. The price of gold is currently stable at the level below $1,700, and It’s hard to find a short-term increase in gold prices. factor.”
Trading in Other Metal Commodities
- Silver futures for delivery in December were up 33.7 cents, or 1.8%, at $19.52 an ounce.
- Copper for December delivery slipped 0.7% to $3.4780 a pound.
- Platinum futures for October delivery rose 0.3% to settle at $925.80 an ounce.
- Palladium futures for December delivery rose 0.9% to settle at $2,191 an ounce.