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02-03-2022|Crypto

Gold futures hit a 13-month high as investors seek safe havens amid Russia's siege of Ukraine.

As Russian forces continued to shell Kharkiv, Ukraine's second-largest city, and signalled they would target intelligence and communication facilities in the capital Kyiv, gold futures climbed sharply to their highest finish in 13 months, buoyed by a broad flight to the perceived safety of precious metals and government bonds.

Russia's invasion of Ukraine, now on its sixth day, has prompted a flurry of financial penalties from a number of Western countries, causing fresh market instability.

In a Tuesday note, Ricardo Evangelista, senior analyst at ActivTrades, said, "Events in Ukraine, following the Russian incursion, continue to dominate the mind-set of investors, lending support to safe-haven assets and maintaining gold far over the $1,900 mark."

April gold GC00, -0.70 percent GCJ22, -0.72 percent gained $43.10, or 2.3 percent, to $1,943.80 an ounce, the highest most-active contract close since January 2021, according to FactSet data. In February, prices increased by 5.8%, the highest increase since May.

Meanwhile, after closing February with an 8.8% gain, May silver SIK22, -1.57 percent increased 4.8 percent, or $1.18, to $25.541 an ounce. On Tuesday, prices reached their highest level since August.

Investors considered how the invasion would affect inflation and global economy, as well as how central banks, particularly the Federal Reserve, would react.

The rise in safe-haven gold comes as the 10-year Treasury note yield TMUBMUSD10Y, 1.752 percent fell to roughly 1.68 percent from 1.836 percent at 3 p.m. Eastern on Monday.

Gold and silver prices are "getting extra support from dropping bond yields, which are further pushing on real yields with inflation continuing to skyrocket," according to Fawad Razaqzada, a market analyst at ThinkMarkets. "Bond yields have declined as safe-haven flows have rebounded, and some investors are lowering their expectations for rapid central bank tightening."

He stated in a note that the odds of a Fed rate hike of 50 basis points have been trimmed to less than 5%, while the European Central Bank's first rate hike forecasts have been moved out to 2023 from December this year.

"Against this context, I predict gold to rise much above $2,000," Razaqzada added.

In addition to bonds and gold, crude-oil prices have risen sharply, with West Texas Intermediate oil CL.1, 4.33 percent over $100 a barrel, raising fears of near-term inflation pressures, which is good for bullion.

"It is unlikely that the situation will be resolved anytime soon," ActivTrades' Evangelista wrote, "with the likelihood of an escalation in the severity of the fighting over the next few days, which might offer space for further spikes in gold prices."

May copper HGK22, 1.27 percent gained 3.2 percent to $4.597 a pound on the Comex. April platinum PLJ22, 1.40 percent increased 1.3 percent to $1,051.90 an ounce, while June palladium PAM22, 2.35 percent increased 1.3 percent to $2,537.80 an ounce.

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