Skip to content

CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Gold prices at 19-month highs amid inflation fear, ETF inflows

Lingering Ukraine tensions raised commodity prices, strengthening gold’s status as an inflation-hedge asset and gold ETFs saw large net inflows over the past two weeks, underpinning buying pressure.

Source: Bloomberg

Gold prices extended higher during Wednesday’s APAC mid-day trading session as investors assessed lingering geopolitical tensions in Eastern Europe. The yellow metal hit an intraday high of $2,070 on Tuesday, just $5 below its all-time high seen in August 2020. Prices have since retreated to $2,050 as profit-taking activity kicked in. The US and UK planned to ban Russian energy products as part of the sanctions punishing Moscow for its invasion of Ukraine. Their continental European counterparts refused to follow suit however because Russian supply is essential to their energy security. These punishments mark the most stringent sanctions against Russia so far, boosting the appeal of gold to investors that are looking for safety.

The Ukraine war and the follow-on sanctions against Russia – the world’s powerhouse supplier of industrial metals - propelled price gains in a wide range of raw materials. These include crude oil, natural gas, nickel, aluminum, wheat and soybean (table below).

Many of them have seen prices hitting all-time highs recently. This stoked fears about stagflation– a combination of slow growth and high inflation. It is not only the magnitude, but perhaps even more so the speed of the rally that shocked investors. Gold prices were partially driven by rising inflation expectations, as the yellow metal was widely perceived as a store of value and hedge against such risks.

Major commodity prices – YTD performance

Source: DailyFX

With the conflict between Russia and Western powers over Ukraine intensifying, haven demand is likely to keep the yellow metal afloat. In the near term however, the strong rally in gold may entice some profit-taking activity. Meanwhile, the LME halted trading in nickel after its price doubled on Tuesday amid an unprecedented short squeeze. With volatility in the metal market falling, gold prices may cool down alongside the rest of the metals.

The world’s largest gold ETF - SPDR Gold Trust (GLD) – saw large among of net inflow over the last two weeks (chart below). This suggests that more buyers are ramping up to purchase more bullion amid rising geopolitical unrest. The number of GLD shares outstanding increased 13.3 million month-to-date, with the number of holdings hitting the highest level in 12 months. An accelerated pace of subscription to the ETF may be viewed as a bullish signal for prices.

Gold Price vs. GLD ETF shares outstanding

Gold Price vs. GLD ETF Shares Outstanding Source: DailyFX

Technically, gold prices breached above multiple resistance levels this week, underscoring a strong upward trajectory. An immediate resistance level can be found at around 2064, the 100% Fibonacci extension. A pullback from here may lead to a test of 2,007 for immediate support. The MACD indicator is trending higher above the neutral midpoint, suggesting that bullish momentum is dominating but prices may be vulnerable to a technical pullback.

Gold - daily chart

Gold - Daily Chart Source: TradingView

This information has been prepared by DailyFX, the partner site of IG offering leading forex news and analysis. This information Advice given in this article is general in nature and is not intended to influence any person’s decisions about investing or financial products.

The material on this page does not contain a record of IG’s trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk.


This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.

Start trading forex today

Find opportunity on the world’s most-traded – and most-volatile – financial market

  • Trade spreads from just 0.6 points on EUR/USD
  • Analyse with clear, fast charts
  • Speculate wherever you are with our intuitive mobile apps
Find out more

See an FX opportunity?

Try a risk-free trade in your demo account, and see whether you’re onto something.

  • Log in to your demo
  • Try a risk-free trade
  • See whether your hunch pays off
Log in now

See an FX opportunity?

Don’t miss your chance – upgrade to a live account to take advantage.

  • Get spreads from just 0.6 points on popular pairs
  • Analyse and deal seamlessly on fast, intuitive charts
  • See and react to breaking news in-platform
Log in now

See an FX opportunity?

Don’t miss your chance. Log in to take your position.

Take advantage

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Plan your trading week

Get the week’s market-moving news sent directly to your inbox every Friday. The Week Ahead gives you a full calendar of upcoming economic events, as well as commentary from our expert analysts on the key markets to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

<h3>How much does trading cost?</h3>
<h3>Find out about IG</h3>
<h3>Plan your trading</h3>

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.