Gold prices rose yesterday as fighting in Ukraine boosted demand

US stock markets: U.S. stocks declined broadly while oil prices and Treasury yields pushed higher yesterday as investors refocused on risks from conflict in Ukraine and the U.S Federal Reserve's actions on inflation. 

The Dow Jones Industrial Average fell 201.94 points or 0.58%, the S&P 500 lost 1.94 points or 0.04% and the NASDAQ dropped 55.38 points or 0.4%. 

Global stock markets rallied last week in anticipation of an eventual peace deal on Ukraine. But on Monday, Ukraine defied a Russian ultimatum that its forces lay down arms in Mariupol, while the European Union considered a possible energy embargo against Russia. 

Economic Calendar

The market is digesting the impact of tighter financial conditions, higher oil prices, and continued geopolitical uncertainty against a backdrop of growth, at least in the U.S. The U.S central bank must move quickly to bring too-high inflation to heel, Federal Reserve Chair Jerome Powell said yesterday, adding that it could use bigger-than-usual interest rate hikes if needed to do so.

Dow Jones Industrial Average

The Dow Jones Industrial Average fell 0.58%. The best performers of the session on the Dow Jones Industrial Average were Chevron Corp, which rose 1.81% or 2.92 points to trade at 164.65 at the close. Meanwhile, Dow Inc. added 1.54% or 0.96 points to end at 63.35 and The Travelers Companies Inc. was up 1.26% or 2.27 points to 182.58 in late trade. The worst performers of the session were Boeing Co, which fell 3.60% or 6.94 points to trade at 185.89 at the close. Home Depot Inc. declined 3.35% or 11.41 points to end at 329.33 and Salesforce.com Inc. was down 2.33% or 5.10 points to 213.70.

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NASDAQ 100

The NASDAQ index fell 0.40%. The top performers on the NASDAQ were Neurosense Therapeutics Ltd which rose 299.36% to 6.23, Clarus Therapeutics Holdings Inc. which was up 58.44% to settle at 1.22 and Yumanity Therapeutics Inc. which gained 58.04% to close at 1.77. The worst performers were Vallon Pharmaceuticals Inc. which was down 68.95% to 2.31 in late trade, Allena Pharmaceuticals Inc. which lost 43.16% to settle at 0.28 and Imperial Petroleum Inc. which was down 36.71% to 1.50 at the close.

Oil price - Crude Oil market, Brent Oil market

Oil prices settled up more than 7% on Monday, with global benchmark Brent climbing above $115 a barrel, as European Union nations disagreed on whether to join the United States in a Russian oil embargo after an attack on Saudi oil facilities. U.S crude futures settled at $112.12 per barrel, up to $7.42 or 7.09%. 

EightCap Review

European Union governments will consider whether to impose an oil embargo on Russia over its invasion of Ukraine as they gather this week with U.S. President Joe Biden for a series of summits designed to harden the West's response to Moscow. The EU and allies have already imposed a panoply of measures against Russia, including freezing its central bank's assets. 

Ukraine defied a Russian demand that its forces lay down arms before dawn on Monday in Mariupol, where hundreds of thousands of civilians have been trapped in a city under siege. With little sign of the conflict easing, the focus returned to whether the market would be able to replace Russian barrels hit by sanctions.

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Precious and Base Metals - Gold price, Silver price, Palladium price

Gold prices rose yesterday as fighting in Ukraine boosted demand for safe-haven bullion, while investors kept a close tab on Moscow-Kyiv peace talks. Spot gold rose 0.5% to $1,931.16 per ounce. U.S gold futures for April settled mostly unchanged at $1,929.50. 

Another escalation around Ukraine will drive significant safe-haven flows to gold, even inflation hedge moves if we see sanctions that trigger another commodity surge. Russia and Ukraine were nearing agreement on "critical" issues, Turkey's foreign minister said on Sunday, but demand for riskier assets retreated and oil prices climbed as fighting continued. 

While rumors of a potential compromise over the weekend brought gold prices down from their highs, the next launching pad for gold would be the $1,900 area. Last week, gold shed more than 3% on hopes for progress in the talks and a U.S interest rate hike. Atlanta Federal Reserve Bank President Raphael Bostic said yesterday he was open to a more aggressive policy tightening while penciling in six rate hikes for 2022.

DeltaStock Review

The market implies a 50-50 chance of a half-point hike in May and an even greater chance by June. Even if the Fed's upper estimates of rate raises become reality, inflation will still be ahead, and real interest rates negative, maintaining a positive environment for gold in the medium term. Spot silver rose 0.8% to $25.15, platinum was up 1.7% at $1,038.98, while palladium rose 3.2% to $2,569.68. 

The Ukraine conflict coupled with COVID-related restrictions in semiconductor fabrication hubs in China could hurt automotive demand for metals such as palladium, used as an autocatalyst in vehicle exhausts to curb emissions. Spot silver rose 0.2% to $25.24 per ounce and platinum was flat at $1,036.56.

Traditional Agricultures - Corn futures, Wheat futures,  Soybean futures

Wheat and corn futures jumped yesterday, with traders saying that exports from the Black Sea region will continue to be disrupted this week due to the fighting in Ukraine. Soybean futures also rose sharply, following gains in the crude oil market that also stemmed from major ructions to energy shipments related to the Russia-Ukraine conflict. Traders also noted buying by investment funds after all three commodities notched losses last week.

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