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Metals Stocks: Gold futures pull back from a 3-month high

Gold futures were retreating Tuesday as the steady march toward conflict in Russia over Ukraine were seen easing somewhat, weakening the case for bullion after the commodity rallied to highs not seen since mid November.

Russia’s Defense Ministry has said it has pulled back a portion of its forces amassed outside Ukraine’s border, even as some battalions were seen moving on a war footing, according to reports.

U.S. officials have said Russia could launch an attack on Ukraine as soon as Wednesday, with more than 100,000 troops at the ready, according to reports, including those from The Wall Street Journal.

Against that backdrop, gold for April delivery
GCJ22,
-1.10%

GC00,
-1.10%

was trading $17.50, or 0.9%, lower to reach around $1,851.90 an ounce. The most-active gold futures on Monday settled at the highest level since Nov. 17, FactSet data show.

The softening of rhetoric around a possible annexation of Ukraine by Russia also was pushing assets perceived as risky, such as stocks, sharply higher, with futures for the Dow Jones Industrial Average
YM00,
+1.23%

DJIA,
-0.49%

and the S&P 500
ES00,
+1.60%

SPX,
-0.38%

headed substantially higher.

Overall, gold has taken a decisively more bullish run higher in recent weeks, supported primarily by the threat of war in Western Russia and concerns about the global recovery from the pandemic and the reaction of central banks world-wide. Gold is seen as a safe-haven asset in times of geopolitic unease.

“Likely, the fundamental demand for gold is now driven by a desire to preserve the purchasing value of capital amid inflation and ongoing price shocks across a range of commodities,” writes Alex Kuptsikevich, senior financial analyst at FxPro, in a Tuesday note.

The analysts cautioned, however, that “geopolitics give a shaky ground behind this growth, so investors should be wary of joining gold’s rise.”

“It is impossible to predict whether the next move will escalate or de-escalate. Now, there are far more signs that the peak of tension is behind us, yet gold continues to gain today,” the FxPro analyst wrote.

Meanwhile, March silver
SIH22,
-2.53%

SI00,
-2.53%

was trading at $23.29 an ounce, down 56 cents, or 2.4%.

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