Gold loses its sheen as oil price drop reignites risk appetite

Gold prices fell on Thursday as global shares rallied, tracking Wall Street gains following a retreat in oil prices after the United Arab Emirates said it would help increase oil production, making safe-haven bullion less appealing.

Spot gold fell 0.8% to $1,975.79/oz by 4.20am GMT, after prices slumped 1% earlier in the session. US gold futures shed 0.3% to $1,982.40.

The safe-haven metal pulled back about 3% in the previous session, its worst intraday decline since January 2021, dropping from a near record high since August 2020, hit on Tuesday.

“I suspect there are still plenty of long positions put on in the last couple of days out there that are still being squeezed. With no new Ukraine headlines to change the dynamic, and with equities rallying strongly in Asia, the downward pressure on gold continues,” said Oanda senior analyst Jeffrey Halley.

Asian shares surged, tracking Wall Street’s overnight gains as planned diplomatic talks between Russia and Ukraine buoyed sentiment. A steep rise in oil and other commodities has sparked concerns about a further jolt to rising inflation and the potential for slowing economic growth.

Investors now await the February US consumer price index data later in the day, ahead of the Federal Reserve’s next policy statement on March 16. Spot gold may slide to $1,952/oz, as it has broken a support at $1,976, according to Reuters technical analyst Wang Tao.

Palladium, used by carmakers in catalytic converters to curb emissions, rose 0.5% to $2,950.76/oz. The metal hit a record high of $3,440.76 on Monday, driven by fears of supply disruptions from top producer Russia.

Among other metals, spot silver shed 0.9% to $25.51/oz, while platinum fell 0.7% to $1,068.52. 

Reuters