By Barani Krishnan
Investing.com -- Good as long as it lasted? Or a lot more fireworks next week?
Gold’s dalliance with $1,900 peaks may not be over. But for this week itself, that high water-mark seems to have hit a crescendo with risk appetite overcoming safe haven trades on Friday to send U.S. stocks and bond yields higher and gold down for the first time in three days and for its first weekly decline in four.
Traders also appear to have grown somewhat weary in chasing bullion prices up on every Russia-Ukraine headline, explaining some of the deflation in the geopolitical pressure that sent gold to 13-month highs in the past two sessions.
“Gold prices are back below the $1900 level as risk appetite continues to stage a comeback despite a tremendous amount of uncertainty with the War in Ukraine,” said Ed Moya, analyst at online trading platform OANDA.
“This week was quite the rollercoaster ride for gold prices and while it appears poised to finish the week slightly lower, the need for safe-havens still remains.”
Gold’s most-active contract on New York’s Comex, April, settled down $38.70, or 0.6% at $1,887.60 an ounce. On Thursday, the benchmark gold futures surged to a January 2021 high of $1,976.20.
Aside from the drop on the day, the front-month in Comex gold also declined 0.6% on the week for its first weekly slide since Jan. 21, when it settled at 1,784.90.
Friday’s pivot in gold came as the yield on the 10-year Treasury note hit six-week highs just above 2%. Wall Street’s Dow, S&P 500 and Nasdaq indexes were all in the positive too, rising between 1% and 2%.
The slide also follows a historic plunge of nearly $100 intraday Thursday in a market that seemed to have everything bullish going for it: US inflation at 40-year highs; a Russia-West showdown unlikely to end anytime soon; and continued weakness in stocks that could divert more funds towards havens like gold.
“The very fact that amidst one of the worst geopolitical military crises, gold witnesses a $98 historic fall, raises questions on where gold is headed actually,” said Sunil Kumar Dixit, commodities strategist at skcharting.com.
To be sure, few think there's lasting damage to gold’s upward momentum from this week’s move lower.
Goldman Sachs (NYSE:GS) said on Thursday that the rally in gold could get to a new record high of $2,350, aided by demand for ETFs, on the back of the situation in Ukraine.
At Investing.com, our reading shows gold could go even higher, to $2,500.
But at that point, we could also see intraday reversals of between $100 and $150 from the highs to the lows.