Gold, palladium slip as Ukraine conflict triggers sharp swings

[BENGALURU] Gold prices reversed course to slide 1 per cent on Friday, and palladium also slipped, as Russia's invasion of Ukraine triggered sharp swings in the precious metals market.

Spot gold slipped 0.9 per cent to US$1,887.05 per ounce by 02.02pm ET (1902 GMT), swinging between gains and losses through the session.

US gold futures settled 2 per cent lower at US$1,887.60.

"We think the price drop is premature, there is a risk of further escalation in the conflict and it could be just a temporary correction," said Commerzbank analyst Daniel Briesemann.

Some market participants believe the sanctions imposed by the West on Russia are not tough enough, Briesemann added.

Prices of the safe-haven metal rallied more than 3 per cent to as high as US$1,973.96 in the last session after Russia attacked Ukraine. They retreated more than US$90 from Thursday's highs.

"The dramatic rise followed by the just as dramatic fall is very technically motivated," said David Meger, director of metals trading at High Ridge Futures.

A rebound in the global shares markets also weighed on the safe-haven metal, even as analysts expect market volatility to remain elevated.

"The risk premium and safe haven demand will continue to support gold, but the upside is limited by the possible rate hike by the US Federal Reserve this March," said Xaio Fu, head of commodities markets strategy at Bank of China International.

Palladium dropped 1.3 per cent to US$2,372.19. The metal touched US$2,711.18 on Thursday, its highest since July.

"Palladium is the precious metal most exposed to Russia's invasion of Ukraine," said Carlo Alberto De Casa, external market analyst at Kinesis.

With Russia being the largest producer of palladium, the likelihood of ever-stricter sanctions on the country and its companies raises the prospect of a supply shortage boosting prices, De Casa added.

Spot silver fell 0.6 per cent to US$24.05 per ounce and platinum eased 0.5 per cent to US$1,051.88.

REUTERS