For gold, it's all about growing recession risk and inflation headlines, analysts say. The precious metal is in high demand among investors as a hedge against inflation. Demand for safe-haven assets amid the tense geopolitical situation in Ukraine also continues to support prices.
According to ANZ senior commodity strategist Daniel Hynes on the conflict in Ukraine, a US military general said the conflict could last a year.
There is a growing risk of a recession in the US as the Federal Reserve plans to implement aggressive tightening at its May and June meetings. Markets do not rule out two rate hikes of 50 basis points.
The Wall Street Journal published its own poll of economists, which says the chances of a recession in the US over the next year are up 28% from January's forecasts of 18%.
In addition, Bank of America is also warning investors about the coming inflationary shock. Inflation expectations remain fairly stable, with real yields on 10-year bonds rising to -0.13%. This is the highest rate since March 2020.
Meanwhile, palladium climbed above $2,520 an ounce on Monday, extending Friday's gains in another volatile session after the recent ban on trading in the metal from Russia.
The latest surge in palladium was provoked on Friday, when, according to the London Platinum and Palladium Market, trading in London of both Russian refiners - JSC Krastsvetmet and the Prioksky Plant of Non-Ferrous Metals - will be suspended.
This is big news for the PGM market, as Russia accounts for just under 40% of global palladium production, making it the second-largest producer. According to TD Securities strategists, supply problems will remain the main problem this week.
Amid supply disruptions, BMO Capital Markets expects palladium to average $2,700 an ounce in the second quarter, compared to a spot price above $2,400 an ounce.
