Gold holds below $1,900 after rallying to 9-month high

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Gold steadied below the $1,900-level on

Wednesday after hitting a nine-month high in the previous

session due to the Ukraine crisis, with investors focusing on

accelerating inflation and expected tightening of monetary

policies by central banks.

Spot gold was little changed at $1,898.81 per ounce,

as of 0424 GMT, after scaling its highest since June 1 at

$1,913.89 per ounce in volatile trade on Tuesday. US gold

futures shed 0.3% to $1,901.00.

“The main catalyst here is the ebbing of that escalation

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risk that essentially we maybe have exhausted the worst of this

crisis, at least in terms of fresh uncertainty,” said Ilya

Spivak, a currency strategist at DailyFX, while referring to the

crisis between Russia and Ukraine.

The United States, the European Union and Britain announced

plans to target banks and elites, while Germany halted a major

gas pipeline project from Russia, which they say has amassed

more than 150,000 troops near Ukraine’s borders. Moscow has

denied planning an invasion.

US Treasury yields edged higher on Tuesday as markets see

rates heading higher, with the US Federal Reserve expected to

move in March.

Money markets are pricing in just a 36.5% probability of a

50 basis point rate hike next month, down recently from around

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60%.

Higher yields and interest rate hikes dent the appeal of

bullion by raising the opportunity cost of holding non-interest

paying gold.

“As the Fed continues to tighten and real rates continue to

go up, markets don’t move in straight lines, but the overall

direction for gold after this Ukraine crisis ebbs is down,”

Spivak said while highlighting the technical outlook on the

metal for the next six months.

Gold could go through $1,750 and test the $1,700/ounce

level, Spivak said.

Spot silver gained 0.5% to $24.20 per ounce, platinum

rose 0.3% to $1,078.99 and palladium was up 0.2%

to $2,352.47.

(Reporting by Asha Sistla in Bengaluru; editing by Uttaresh.V)