LONDON: Gold steadied on Thursday as the Russia-Ukraine conflict kept investors on their toes and buoyed demand for safe-haven bullion, countering pressure from an uptick in riskier assets, while supply concerns pushed palladium to a seven-month peak.
Spot gold held its ground at $1,926.10 per ounce by 0726 GMT. US gold futures rose 0.4% to $1,930.50.
Ukraine’s second-biggest city, Kharkiv, suffered heavy bombardment on Wednesday, while a fresh round of sanctions by the United States was bound to make it harder for Russia to modernise its oil refineries.
Asian shares gained ground after reassuring comments from the US Federal Reserve to “carefully” raise interest rates at its upcoming March meeting, but be ready to move more aggressively if inflation does not cool as quickly as expected.
“This is the push me, pull you effect. Potential for higher interest rates from better economic activities is clearly a negative for gold, that’s being overwhelmed by the geopolitical concerns,” said Michael McCarthy, chief strategist officer at Tiger Brokers, Australia.
Although gold is considered a safe investment during political and economic uncertainty, rising US interest rates increases the opportunity cost of holding bullion.
“At one stage, the reality of a better economic outlook will weigh on gold. So one potential scenario is a spurt towards those all-time highs over the next two weeks before the gravity effect of higher interest rates start to pull gold prices down again,” McCarthy added.
Palladium, used by automakers in catalytic converters to curb emissions, jumped 2% to $2,721.78, after hitting a fresh high since July at $2,735.18 earlier in the session.
With Western nations having ratcheted up sanctions on Russia, which accounts for 40% of global palladium production, analysts warned of further supply constraints for the metal in an already tight market.
Spot silver rose 0.3% to $25.34 per ounce, while platinum gained 1.3% to $1,085.35.
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