DUBAI: Gold prices hit their highest level in over eight months as investors rushed to the precious metal as a safe haven amid the Russia-Ukraine tension.
The price of gold hit $1,979 per ounce late last week climbing to its highest level since June 11, 2021, according to official figures.
The precious metal is set for a third straight weekly gain, its longest run this year, even as the US Federal Reserve is preparing to raise rates, which often dampen’s demand for gold.
Gold eased on Monday as a plan for the US and Russian presidents to hold a summit on the Ukraine crisis dented safe-haven demand in the yellow metal.
Spot gold fell 0.3 percent to $1,891.85 in early morning trading.
US President Joe Biden has accepted in principle a summit with Russia’s Vladimir Putin over the Ukraine crisis, after the foreign ministers of the two countries meet next week and if an invasion has not occurred, the White House said on Sunday.
“Global investors are deeply concerned about the potential (conflict) between Russia and Ukraine, and the US president has been repetitively saying that an invasion is possible in the days to come,” said Margaret Yang, a strategist at DailyFX.
“On the other hand, investors are also mewling on the Federal Reserve rate hike in March, so that is likely to suppress gold prices.”
Investors are worried over prospects of an aggressive Federal Reserve tightening as inflation runs rampant, analysts have said.
At least six Federal Reserve officials are set to speak this week and investors will be keen to find out their views on a possible 50 basis point hike in March.
Rising interest rates increase the opportunity cost of holding non-yielding bullion.
Spot silver fell 0.8 percent to $23.78 per ounce, platinum rose 0.4 percent to $1,071.62.
Auto-catalyst metal palladium dipped 1.2 percent to $2,318.85.
“Palladium prices spiked above $2,300/oz due to increased risk from Russia. Nearly 35 percent of palladium production comes from Russia. This saw palladium backwardation widening last month,” ANZ analysts said in a note.
“Investor interest remains subdued, on expectations of low chip availability lingering into Q2 2022.”