Gold steadies as traders weigh war

Federal Reserve officials signalled they remain on track to raise interest rates next month.They stressed the need to confront the hottest US inflation in 40 years

HONG KONG: Gold held a decline amid a rebound in stock markets as investors remained on edge while assessing the impact of Russia’s invasion of Ukraine and Western sanctions.

European shares surged the most in a month as risk sentiment improved following yesterday’s sharp sell-off. Bullion fell on Thursday after surging to the highest in more than 17 months as traders digested a new round of sanctions on Russia following the country’s attack on its neighbour.

United States President Joe Biden imposed penalties on Russia, whose forces have pushed closer to Ukraine’s capital, Kyiv, in one of Europe’s worst security crises since World War II. This includes action against five major Russian banks to impair access to foreign currency, but stops short of barring the nation from the Swift international payments system. Russian energy supplies were also spared.

Meanwhile, Federal Reserve officials signalled they remain on track to raise interest rates next month.

They stressed the need to confront the hottest US inflation in 40 years, despite uncertainty posed to the global economy by the Russia-Ukraine conflict. Higher rates could weigh on non-interest bearing gold.

“In the near term, the safe-haven bid amid an equity sell-off coupled with lower real yields has been the overriding factor and risk-off flows will continue to dominate gold,” RBC Capital Markets strategists led by Christopher Louney, said in a report dated Feb 24.

Spot gold declined 0.2% to US$1,900.64 (RM7,983) an ounce at noon in London. Prices jumped to US$1,974.34 (RM8,292) on Thursday, the highest level since September 2020, before ending 0.3% lower.

The Bloomberg Dollar Spot Index was little changed

Silver steadied and platinum edged lower. Palladium gained following big swings in the previous session on concerns over potential supply disruptions. — Bloomberg

Russia produces about 40% of the palladium mined globally.

©2022 Bloomberg L.P.