Watchman Report March 4, 2022 "Gold At 2 Year High. Gold Up 6% In February"

Goldman Sachs: Gold Price To Hit $2,150 On Russian Invasion, 'Very High Inflation Path'

Monday February 28, 2022 15:53 As the West steps up sanctions against Russia in the aftermath of a full-scale invasion of Ukraine, Goldman Sachs raised its commodities price forecasts, citing supply disruptions and an even more problematic inflation outlook. The commodities to pay close attention to are the ones Russia is a major producer of — oil, gas, aluminum, palladium, nickel, wheat and corn. Gold is another safe-haven commodity that is due for a much bigger rally going forward, according to Goldman. "The recent escalation with Russia create clear stagflationary risks to the broader economy, driven by higher energy prices, which reinforce our conviction in higher gold prices in coming months and our $2,150/toz (troy ounce) price target," Goldman said. Goldman explained that gold would play a central role in this conflict as Russia turns to the precious metal for leverage amid sanctions. Russia's gold reserves total 2,298.53 tonnes, according to World Gold Council. "Gold's unique role as the currency of last resort will likely be apparent if restrictions on Russia's central bank accessing its offshore reserves leave it leveraging its large domestic gold stockpiles to continue foreign trade, most likely with China," the bank said. From the macro perspective, Goldman raised its inflation outlook, stating that it is "increasingly concerned" about the pace of inflation in 2022. "A very high inflation path in 2022 should make an easy case for steady rate hikes at all seven remaining" Federal Reserve meetings in 2022, said Goldman economist David Mericle said in another note to clients.

WSJ MarketWatch: Gold Settles Back Above $1,900 As Sanctions Hit Russia, Fueling A Rush Into ‘Precious Havens’

Feb. 28, 2022 Gold up nearly 6% in February, largest monthly rise since May Gold futures shot higher on Monday, with prices settling back above $1,900 after the U.S. and its allies added new sanctions against Russia over the weekend as a result of its invasion of Ukraine last week. “If there is no de-escalation between the West and Russia, there will be a surge of physical investment demand into precious metals as a rush into precious safe havens explodes,” said Peter Spina, president and chief executive officer at GoldSeek.com, noting that Russia is also among the world’s biggest gold producers. Still, gold prices may see “some selling pressures from some liquidity needs, so you will see some volatility,” Spina told MarketWatch. “It is difficult to trade this market in the short term,” but investors buying with a “longer-term focus will do quite well.” “It is difficult to trade this market in the short term…. Investors buying with a longer-term focus will do quite well.” — Peter Spina, GoldSeek.com He said that while it’s “very difficult to make a solid call short-term call,” gold may “see a huge price explosion to the upside at any moment,” given that there are so many risks at the moment.

Russian’s Invasion of Ukraine Pushes Hedge Funds Into Gold

Monday February 28, 2022 17:02 For the third straight week, hedge funds and money managers have been buying gold at a steady pace placing bullish bets in the precious metal to hedge against growing geopolitical uncertainty and the rising inflation threat, according to the latest data from the Commodity Futures Trading Commission. Commodity analysts at Société Générale said that last week the gold market saw bullish inflows of $6 billion. They noted that this was the fifth strongest week of inflows on record. "A few days before the Ukraine invasion, gold was supported by Russia's continued military build-up, despite Putin's commitments to not invade its neighbor. On Feb. 21, Russia recognized two separatist republics in eastern Ukraine, triggering safe-haven flows to gold on uncertainties about an open conflict. Since last week's survey, gold prices pushed to a nearly 2-year high to $1,976.50 an ounce but were unable to hold those gains. "Certainly, safe-haven flows have contributed to the strong price action, helping to fuel the rise in non-commercial longs, but the outsized increase in the money manager longs component also supports our findings that CTAs likely added longs into the rally. Safe-haven demand is also flowing into the silver market as hedge funds increased their bullish bets and covered their short positions, pushing prices above the psychological $24 an ounce level. Following the survey period, silver prices shot to a six-month high of $25.705. Although silver prices have given up a lot of those gains, prices have held support above $24 an ounce.