Gold inches higher as Ukraine conflict lifts safe-haven bids

div classBodysc17zpet90 cdBBJodivpBy Asha Sistlap

pReuters – Gold prices edged higher on Wednesday as concerns of an escalation in the RussiaUkraine conflict increased safehaven bids for the precious metal, although a firmer U.S. dollar capped bullions gains. pdivdivdiv classBodysc17zpet90 cdBBJodiv

pSpot gold was up 0.2 at 1,969.61 per ounce, as of 0400 GMT, after hitting a near onemonth peak of 1,978.21 on Tuesday. U.S. gold futures were down 0.1 at 1,973.70.p

p“Gold is benefiting from some safehaven demand this week as inflation fears grow, China growth stumbles and the war in the Ukraine gets set for round two,” said OANDA senior analyst Jeffrey Halley.p

pRussian President Vladimir Putin described the onandoff peace negotiations as “a deadend situation” on Tuesday, while U.S. President Joe Biden said for the first time that Moscows invasion of Ukraine amounts to genocide.p

pThe dollar index firmed near May 2020 highs, making gold less attractive for overseas buyers, after reassurance from U.S. Federal Reserve Governor Lael Brainard that the central bank will stay the course on hiking interest rates. [USD] p

pAlthough gold is considered a hedge against inflation and geopolitical risks, interest rate hikes would raise the opportunity cost of holding nonyielding bullion.p

p“March inflation came in at up 8.5, yearonyear, which is a 40year high, inflation historically bullish for hard commodities,” said Michael Langford, director at corporate advisory AirGuide.p

p“That being said gold has no attributable yield and in a high interest rate environment, will be less desirable relative to other asset classes. I see gold having some minimal upside but medium to longerterm more likely to fall in price.” p

pSpot gold faces a strong resistance at 1,975 per ounce, according to Reuters technical analyst Wang Tao. [TECHC] p

pSpot silver was up 0.5 at 25.48 per ounce, platinum rose 0.7 to 971.96 and palladium gained 2.7 to 2,387.77.p