WGC: Gold Prices Recorded Largest Monthly Surge Since May 2021

The WGC report noted that safe-haven demand outweighed higher nominal yields and a marginally strong dollar, mainly triggered by volatility and uncertainty following the Russian invasion of Ukraine.

SEATTLE (Scrap Monster): The World Gold Council (WGC) published its latest gold market commentary, which says that geopolitical crisis took centre stage in February 2022. The prices of the yellow metal have surged by 6% over the previous month to hit $1,910 per ounce in February, thus recording the largest monthly gain since May last year.

The WGC report noted that safe-haven demand outweighed higher nominal yields and a marginally strong dollar, mainly triggered by volatility and uncertainty following the Russian invasion of Ukraine. The COMEX net positioning in gold touched the highest level since July 2020 and global ETFs added nearly 35 tonnes to its global holdings.

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Going forward, the risk of economic slowdown and high inflation could further support investment demand for gold, it noted. The long-awaited US Fed meeting is scheduled to be held in March 2022, where interest rates are expected to be lifted for the first time since 2018. The European Central Bank is not expected to raise rates until late-2022, whereas the Bank of England is likely to raise rates again.

The extent to which central banks can tighten their monetary policy will be limited by potential economic slowdown. Incidentally, the risk of a slowdown is particularly acute in Europe, WGC noted.

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