NEW YORK: Gold prices steadied on Monday as tensions over Ukraine buoyed its safe-haven allure, while investors held off on big moves ahead of a Federal Reserve meeting this week that could provide clues on the US central bank’s interest rate trajectory.
Spot gold was little changed at $1,834.00 per ounce by 12:21 p.m. EST (1721 GMT). US gold futures rose 0.1% to $1,834.20.
At its two-day meeting starting on Tuesday, the Fed is expected to announce it will tighten monetary policy at a much faster pace than thought previously to tame persistently high inflation.
“The Ukraine story is positive for gold and the Fed policy will eventually evolve into a little bit more conservative tapering since the Fed still believes a lot of this is going to be transitory,” said Ed Moya, senior market analyst at brokerage OANDA.
While gold is considered a hedge against inflation and geopolitical risks, interest rate hikes would raise the opportunity cost of holding non-yielding bullion.
NATO said it was putting forces on standby in eastern Europe in response to Russia’s military build-up at Ukraine’s borders, adding to signals the West is bracing for an aggressive Russian move against the Eastern European country. Moscow has denied any plan to invade.
But despite a resultant selloff in Wall Street, gold’s gains were capped as many investors also sought refuge in the dollar , thereby limiting demand for bullion amongst overseas buyers.
Eventually, gold will become a key holding for a lot of investors as they look for protection as growth concerns become more elevated and as the outlook becomes more uncertain going forward, Moya noted, adding “gold could trade between $1,800-$1,860, or even a little higher in the next couple of weeks.”
Spot silver dropped 2.4% to $23.65 an ounce and platinum slipped 1.9% to $1,009.92, while palladium rose 1.8% to $2,144.15.