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Commodity Market: Gold heads for fourth weekly gain in five as Ukraine nuclear incident fuels safe haven demand, US NFP data eyed

Spot Gold edged higher and the US Dollar advanced to highs unseen since June 2020 on Friday following reports of a Russian strike on a Ukraine nuclear power plant that further fueled concerns of energy shortages.

Ukraine said that Russian military forces assaulted its Zaporizhzhia nuclear power plant earlier on Friday, while setting an adjacent five-story training facility ablaze.

Zaporizhzhia is the largest of Ukraine’s 4 nuclear power plants, which all account for nearly 50% of the nation’s electricity.

More details on the strike revealed that essential equipment had not been affected and the fire had been contained. Reports also stated that radiation levels had not changed.

Meanwhile, inflation fears were picking up pace, with Russia becoming more isolated every day.

Russia is one of the world’s key exporters of raw materials, ranging from natural gas and crude oil to wheat, and also the third-largest producer of gold. Therefore, a possible exclusion of supplies from the country as a result of sanctions along with the shuttering of Ukrainian ports has triggered a frenzy in global commodity markets.

“We are seeing the commodity ‘melt-up’ continue with no sign of a let-up,” ED&F Man Capital Markets wrote in a note, cited by Reuters.

“More precisely, there is a massive repricing going on which will presumably stop when most, if not all, of Russia’s contribution to the global supply/demand commodity chain is ‘scrubbed’ off the numbers and discounted by the markets.”

As of 9:47 GMT on Friday Spot Gold was edging up 0.41% to trade at $1,944.35 per troy ounce. Earlier in the trading session the yellow metal rose as high as $1,951.02 per troy ounce, which has been its strongest price level since February 24th ($1,974.48 per troy ounce).

The commodity looked set to register its fourth gain in five weeks, while being up 2.83%.

Gold futures for delivery in April were gaining 0.54% on the day to trade at $1,946.35 per troy ounce, while Silver futures for delivery in May were up 0.50% to trade at $25.337 per troy ounce.

The US Dollar Index, which reflects the relative strength of the greenback against a basket of six other major currencies, was edging up 0.35% to 98.073 on Friday. Earlier in the trading session the DXY went up as high as 98.092, which has been its strongest level since June 1st 2020 (98.322).

In terms of macroeconomic data, today market players will be paying attention to the February report on US Non-Farm Payrolls, Unemployment Rate and Average Hourly Earnings due out at 13:30 GMT. Employers in all sectors of US economy, except the farming industry, probably added 400,000 new jobs last month, according to a consensus of analyst estimates.

Near-term investor interest rate expectations were little changed. According to CME’s FedWatch Tool, as of March 4th, investors saw a 94.0% chance of the Federal Reserve raising interest rates to the 0.25%-0.50% range at its policy meeting on March 15th-16th, compared to a 98.8% chance on March 3rd.

Daily Pivot Levels (traditional method of calculation)

Central Pivot – $1,933.29
R1 – $1,944.47
R2 – $1,952.48
R3 – $1,963.66
R4 – $1,974.84

S1 – $1,925.29
S2 – $1,914.11
S3 – $1,906.10
S4 – $1,898.10

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