(Bloomberg) — Gold tumbled after earlier surging to the highest in 17 months with investors viewing sanctions on Russia as weaker than expected.
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President Joe Biden promised to inflict a “severe cost on the Russian economy” in a speech from the White House on Thursday, hours after Russian tanks, troops and aircraft pushed through into Ukraine. But Wall Street was expecting a harder line against Russia, for example, by ousting them from the Swift international banking network and sanctioning President Putin personally, said Ed Moya, senior market analyst at OANDA.
Investors bought bullion as insurance as the Ukraine crisis deepened and the standoff between Russia and the West accelerated. This helped to offset headwinds like the U.S. Federal Reserve’s policy tightening that was expected to weigh on the metal.
“Gold was ripe for profit-taking, given traders did not see a clear catalyst to take prices above the $2,000 level,” Moya said. “The dip in gold prices was overdone, and prices will probably stabilize above the $1,900 level later in Asia.”
Bullion earlier rose to the highest since September 2020 as investors flocked to haven assets after the Russian invasion of Ukraine. Russian forces have neared the capital city of Kyiv and western allies see it falling within hours.
Spot gold slipped as much as 1.6% to $1,878.44 an ounce before trading at $1,888.55 at 3 p.m. in New York. Bullion for April delivery rose 0.8% to settle at $1,926.30 on the Comex.
Other precious metals also fell, with palladium falling as much as 6% after gaining much as 9.5% earlier to its highest since July on concerns over potential supply disruptions. Russia produces about 40% of the palladium mined globally. Silver and platinum also were lower, while the Bloomberg Dollar Spot Index rose 0.9%.
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