NEW YORK: Gold eased on Thursday after the dollar strengthened and yields rose as investors geared up for US interest rate hikes, but safe-haven demand triggered by the Ukraine crisis and mounting inflation kept bullion on track for a weekly gain.
Spot gold fell 0.3% to $1,971.04 per ounce by 1:45 p.m. ET (1745 GMT).
US gold futures settled down 0.5% at $1,974.9.
While central banks the world over are racing to tame surging inflation, the European Central Bank on Thursday stuck to its plans to dial back stimulus this year, a move seen as less aggressive in the face of soaring inflation. “You’ve had a dovish surprise from the ECB, which is really providing strength here for the dollar. So gold is getting hit hard here,” said Edward Moya, a senior analyst with OANDA.
The dollar rose 0.5%, making bullion expensive for overseas buyers.
Also hitting gold on the day, the benchmark 10-year US Treasury yield rose.
Although gold is considered a hedge against inflation and geopolitical risks, interest rate hikes raise the opportunity cost of holding non-yielding bullion.
New York Fed President John Williams said the central bank should consider raising rates by a half percentage point at its next meeting in May. However, gold was still headed for a second straight weekly gain, up about 1.3% thus far.
“Russia appears to be preparing to launch a major offensive in the east of the country (Ukraine) – that is generating considerable demand for gold as a safe haven,” Commerzbank analyst Daniel Briesemann said in a note.
Spot silver was down 0.7% at $25.54 per ounce, yet was en route to a 3.2% weekly gain, which would be its best since early March.
Platinum rose 0.4% to $990.00 per ounce, on track for its first weekly gain in six, while palladium rose 1.8% to $2,355.43, down 3% for the week so far.
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