Gold price posts best results since Q3 2020, path to $2,000 looks clear

NEW YORK (Apr 1)  The gold market is closing the first quarter of 2022 with the best gains since Q3 2020 — when the precious metal was in very high demand and scored new record highs of above $2,060 an ounce.

Gold has gained more than 6% in the first quarter, with spot prices last trading at $1,944 an ounce. This is an impressive turnaround for the precious metal, which wrapped up 2021 down 3.7% — gold's worst year since 2015. The price surge was apparent when gold made a run for record highs earlier this month, pushing well above $2,000 an ounce.

The safe-haven metal surged in demand after Russia's invasions of Ukraine. Geopolitical uncertainty coupled with even higher inflation triggered a new wave of inflows into the sector. Also, the yield-curve recession signals have boosted gold's investment case as the 2-year and the 10-year spread briefly inverted in March.

"Safe-haven flows are the name of the game for gold. So long as material progress on ceasefire talks and de-escalation remains elusive, haven flows are likely to keep the yellow metal propped up against an increasingly hawkish Fed backdrop," said strategists at TD Securities.

During the last trading day of the quarter, gold once again rallied after Russian President Vladimir Putin threatened to halt the country's gas exports if "unfriendly" countries refused to pay in rubles.

"In order to purchase Russian natural gas, they must open rouble accounts in Russian banks. It is from these accounts that payments will be made for gas delivered starting from tomorrow," Putin said in televised remarks. "If such payments are not made, we will consider this a default on the part of buyers, with all the ensuing consequences. Nobody sells us anything for free, and we are not going to do charity either - that is, existing contracts will be stopped."

In response, gold pared all daily losses and rallied another $10, with April Comex gold futures last at $1,944.40 an ounce.

KITCO