Gold gains as Ukraine tensions buoy safe-haven appeal of bullion

GOLD advanced on Monday as a sell-off in Wall Street driven by geopolitical tensions over Ukraine bolstered its safe-haven appeal, while investors prepared for the Federal Reserve’s rate hike decision.

Spot gold rose 0.4% to $1,840.16 per ounce by 14:39 p.m. EST (1939 GMT). US gold futures settled up 0.5% at $1,841.70.

NATO said it was putting forces on standby in eastern Europe in response to Russia’s military buildup at Ukraine’s borders.

“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 Edward Moya, senior market analyst at brokerage OANDA.

The sell-off on Wall Street worsened on the Ukraine-Russia tensions and expectations that the Fed would tighten monetary policy at a much faster pace to tame high inflation.

But CMC Markets UK chief market analyst Michael Hewson said the Fed was unlikely to have a big impact on gold at present “because the markets are more concerned about what’s going on in eastern Europe,” especially considering a March interest rate hike has been priced in.

Gold also seemed to shake off, to some extent, pressure from inflows into rival safe-haven dollar.

“Assuming that the current wave of risk aversion ebbs away eventually as the Fed addresses these fears, and barring a deterioration of the economic outlook, we thus believe that the gold and silver markets are again experiencing a temporary but no lasting rebound,” Julius Baer analyst Carsten Menke said.

Spot silver dropped 1.9% to $23.78 an ounce and platinum slipped 1.1% to $1,017.81, while palladium rose 2% to $2,149.35. —