Gold near 19-month high as ban on Russian oil drives flight to safety

Gold near 19-month high as ban on Russian oil drives flight to safety

Gold prices surge by almost 1,000 baht

People stand in a long queue outside a gold shop in the Yaowarat area in Bangkok on Monday. Most were selling their gold after prices climbed above a record 30,000 baht per baht-weight, driven mainly by the Russian war on Ukraine. (Photo: Nittaya Nittayai)
People stand in a long queue outside a gold shop in the Yaowarat area in Bangkok on Monday. Most were selling their gold after prices climbed above a record 30,000 baht per baht-weight, driven mainly by the Russian war on Ukraine. (Photo: Nittaya Nittayai)

Gold held near a 19-month high following a ban on Russian oil imports, as mounting concerns over inflation and economic growth boost demand for the haven asset.

In Thailand, the Gold Traders Association announced on Wednesday morning the buying prices at 31,320.56 baht per baht-weight for gold ornaments and 31,900 baht per baht-weight for gold bullion, an increase of 900 baht from the previous day.

Selling prices were set at 32,500 baht per baht-weight for gold ornaments and 32,000 baht per baht-weight for gold bullion.

The Gold Traders Association's website was temporarily down on Wednesday morning due to server problems.

Bullion has gained 12% in 2022 and is closing in on a record as investors seek a store of value amid the threat of an inflationary shock to the global economy. Holdings in gold-backed exchange-traded funds have climbed to the highest since March 2021, with inflows of about 152 tonnes this year, according to initial data compiled by Bloomberg

The impact of the war in Ukraine and sanctions on Russia have reverberated across the globe, driving commodities higher on supply woes. The latest move by the United States and the United Kingdom to ban Russian oil imports has stoked further fears over intensifying price pressures as costs of raw materials such as food, energy and metals costs surge. 

“The ban on Russian oil by the US is causing more inflation jitters,” said Howie Lee, an economist at Oversea-Chinese Banking Corp. “We all saw that coming, but still, it feels like a roller coaster drop moment. With this ban, oil is easily expected to trade at new records. By that correlation, it is not difficult to see why gold may also be trading at a new record high soon.”

Spot gold dropped 0.2% to US$2,047.05 an ounce at 10.24am in Singapore. Prices touched $2,070.44 on Tuesday, just $5 short of an all-time high reached in August 2020.

Nominal gold prices should breach $2,125 over the next three months and trade in a higher range for the rest of 2022 as “financial markets grapple with surging headline inflation, geopolitical uncertainty, and recession tail risks,” Citigroup Inc analysts including Aakash Doshi, said in a report dated Tuesday.

Palladium advanced 3% on concerns over potential supply disruptions as Russia produces about 40% of the metal mined globally. Silver and platinum both traded near June highs.


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