Gold unchanged amid easing Ukraine-Russia tension

Bengaluru — Gold was flat on Wednesday, after hitting an eight-month high in volatile trade last session, as easing Russia-Ukraine tension countered support from weaker bond yields.

Spot gold was little changed at $1,852.62/oz, at 4.15am GMT. US gold futures dropped 0.1% to $1,854.10. Gold prices touched their highest level since June last year on Tuesday, before reversing course to close almost 1% lower.

Asian shares rallied, as fears of a Russian invasion of Ukraine this week dissipated after Moscow indicated it was returning some troops to base from exercises. The dollar firmed slightly, hurting gold demand from overseas buyers, but a dip in US treasury yields decreased the opportunity cost of holding non-interest-paying bullion and capped the metal’s losses.

Looking ahead, the more fungible dollar is the preferred safe haven to gold among core investors and could fall on any further de-escalation in the Ukraine crisis, prompting a rally in gold and vice versa, said Michael Langford, director at corporate advisory AirGuide.

The US Federal Reserve will kick off its tightening cycle in March with a 25 basis-point interest rate hike, a Reuters poll found, but a growing minority says it will opt for a more aggressive half-point move to tamp down inflation.

“Besides weekly momentum indicators and buying the ‘dip’ indicating that the path of least resistance is higher, most traders do expect higher volatility to be a mainstay of gold markets going forth as rumours and market whispers increase,” Phillip Futures analyst Avtar Sandu said in a note.

Among other precious metals, spot silver fell 0.1% to $23.33/oz and platinum gained 0.2% to $1,027.47, while palladium jumped 2.7% to $2,309.18.

Reuters