Gold Climbs as Sanctions Raise Concern Over Global Growth

(Bloomberg) -- Gold extended gains as investors weighed mounting risks to global growth from sanctions on Russia in the wake of its invasion of Ukraine.

Treasuries climbed, and traders are abandoning bets on a half-point Federal Reserve hike this month amid concern that an escalation of war will weigh on the economy. U.S. equities fell while the dollar advanced. 

Gold, which fell last year, posted its best February since 2016 as demand for the metal as a store of value climbed. The rebound underscores worries among investors confronting high inflation at the same time war in Ukraine clouds the economic outlook. 

Bullion remains “largely supported amid haven flows due to the Ukraine situation,” said Fawad Razaqzada, market analyst at ThinkMarkets. The metal also got additional support from falling bond yields, which are further weighing on real yields with inflation continuing to soar. Investors are reducing their expectations about aggressive tightening from central banks, according to Razaqzada. 

Bullion ETF holdings registered the biggest daily inflow in three weeks on Monday, according to Bloomberg data. 

“Gold ETF inflows is a clear sign generalist investors are sourcing war hedges and safe havens,” said Nicky Shiels, head of metals strategy at MKS PAMP SA.

Spot gold climbed 1.7% to $1,941.33 an ounce as of 2:11 p.m. in New York, after rising 6.2% in February. Bullion for April delivery gained 2.3% to settle at $1,943.80 on the Comex. Palladium climbed 3.3% after surging 5.2% in the previous session on concerns over potential supply disruptions. Russia produces about 40% of the palladium mined globally. Silver and platinum advanced.

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