Sunday, April 2

Gold firms near 1-week high as political risks buoy demand

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Gold prices firmed on Tuesday as

Russia-Ukraine concerns kept the safe-haven metal supported near

the previous session’s over one-week high, while markets await

US inflation data that is crucial for the Federal Reserve’s

tapering timeline.

Spot gold was steady at $1,819.71 per ounce, by 0614

GMT, having risen to the highest level since Jan. 26 on Monday.

US gold futures dipped 0.1% to $1,820.40.

“Geopolitical tensions surrounding Russia and Ukraine are

pushing gold prices higher. Besides, investors are waiting for

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Thursday’s US inflation data,” said Margaret Yang, a

strategist at DailyFX, adding that January inflation is

projected to rise higher than December levels.

According to a Reuters poll, the US consumer price index

for January is expected at an annual rise of 7.3%, which would

be the largest such increase since 1982.

“US CPI will be the major risk to gold this week. A high

print would probably be quite bearish as traders place higher

odds on Fed tightening,” said IG Markets analyst Kyle Rodda.

The expected 7.3% rise in CPI is a high bar to meet, “so if

it undershoots, gold could get a run-on,” Rodda added.

Limiting gold’s gains, the benchmark 10-year US Treasuries

firmed near their highest levels in more than two years.

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Gold is considered a hedge against inflation and

geopolitical risks, yet rate hikes would raise the opportunity

cost of holding non-yielding bullion.

If Russia invades Ukraine, US President Joe Biden said on

Monday that the Nord Stream 2 gas pipeline would be halted while

British Prime Minister Boris Johnson said sanctions and other

measures will be ready.

Demand for safe-haven assets such as gold has helped offset

pressure from expectations of faster US rate hikes this year,

analysts noted.

Silver fell 0.56 % to $22.86, platinum was

down 0.5% at $1,015.20, and palladium fell 0.2% to


(Reporting by Seher Dareen in Bengaluru; additional reporting

by Swati Verma; Editing by Shailesh Kuber and Sherry