Gold holds steady as Ukraine concern offsets aggressive Fed bias

Gold looked for direction on Thursday, as supportive safe haven demand from Russia’s invasion of Ukraine was offset by signs that Federal Reserve policymakers could be more aggressive in reining in inflation.

Spot gold was up 0.1% at $1,945.56 per ounce by 1026 GMT, while US gold futures were up 0.3% at $1,943.10.

“Gold’s rally is severely capped by the Fed’s aggressive bias towards rate hikes, although the precious metal remains well supported by lingering fears of global repercussions from the Russia-Ukraine war,” said Han Tan, an analyst Head of Exinity Market.

Gold is highly sensitive to rising interest rates, which raises the opportunity cost of holding bullion.

Last week, the US central bank raised the cost of borrowing by 25 basis points, disappointing parts of the market that had expected a higher rise. Since then, Fed policymakers have advocated a more aggressive approach to curbing inflation.

The stance of further monetary tightening has boosted the dollar and the yield on US 10-year Treasury bonds, while putting pressure on gold, which pays no interest.

With the rise of bullion-backed exchange-traded funds, “gold could attract more suitors who cling to the precious metal as a safe haven and hedge against inflation, especially if stagflation risks are amplified in the near term,” he said. So.

In other precious metals, spot silver was trading flat at $25.07 an ounce; platinum fell 0.8% to $1,012.49; and palladium was down 0.3% to $2,504.70.