Gold futures fell for a second straight session Monday as the dollar strengthened and investors focused on the progress of the war between Russia and Ukraine.
Analysts at Zaner wrote in a comment on Monday that the war in Ukraine had led to a steady interest in buying gold and that a new round of sanctions against Russia could infuriate Russian leaders and could lead to more Russian action, leading to greater volatility in gold and silver.
Ukrainian President Zelensky said he is willing to discuss Ukraine's neutral status and provide security guarantees to Russia to ensure peace "without delay." Zelensky said neutrality will pull Ukraine out of NATO or other military alliances and should be decided by Ukrainian voters after Russia withdraws its troops.
Moscow said last week that the current priority is to ensure the security of the entire eastern Donbass region. The region has been partially controlled by Russian-backed separatists since 2014.
"optimism that the bloodshed in Ukraine is coming to an end has reduced the attractiveness of gold as a safe haven," Rupert Rowling, a market analyst at Kinesis Money, said in a report.
Rhona O'Connell, head of market analysis for Europe, the Middle East and Asia at StoneX, said the dollar has generally been the main safe haven in recent weeks, but interest in gold, while may have waned, remains relatively stable. In the face of continuing geopolitical risks, investor sentiment remains optimistic. "
Treasury yields rose sharply last week, but fell slightly in trading on Monday. Higher yields increase the opportunity cost of holding non-yielding assets.
Connell pointed out that the macroeconomic outlook shows that central banks around the world are expected to take a series of interest rate increases within this year, which will hinder the ability of gold prices to continue to rise for a long time.
But while gold's upside potential appears to be limited, the war in Ukraine also provided solid support for the precious metal. So while the fact that both sides are negotiating is a positive sign, investors are unlikely to fully lift the fear deal after the Russian invasion until the talks successfully conclude the fighting.
Connell believes that gold prices are likely to remain between $1900 and $2000 an ounce for the foreseeable future.
