Gold prices hit its highest in almost nine months on Tuesday before pulling back as investors waiting for more developments in the Ukraine crisis repositioned near the pivotal $1,900 an ounce mark.
Spot gold was down 0.2% at $1,902.71 per ounce by 14:06 ET (1906 GMT), having hit its highest since June 1 at $1,913.89. U.S. gold futures settled 0.4% higher at $1,907.40.
Wall Street’s main indexes opened lower amid the escalating Russia-Ukraine tensions, while energy stocks soared as oil prices closed in on the $100 per barrel mark.
The U.S. and its European allies are set to announce fresh sanctions against Russia after President Vladimir Putin recognised two breakaway regions in eastern Ukraine and ordered the deployment of troops there.
“It’s not surprising to see gold well supported in this environment given its traditional safe-haven play,” said David Meger, director of metals trading at High Ridge Futures.
However, inflationary pressures have been a key driver of gold’s performance over the last several weeks in its sideways to higher trend and interest rate increases may not overshadow this trend, Meger said.
Gold is considered a hedge against inflation and political risks. But interest rate hikes, especially by the Federal Reserve, tend to dim the appeal of bullion, which pays no interest.
Analysts attributed gold’s slight pullback to some profit-taking. Saxo Bank analyst Ole Hansen said this was “because there is obviously at this point quite an elevated risk premium baked into the price of gold”.
Meanwhile, spot silver rose 0.9% to $24.16 an ounce after touching its highest in a month at $24.35. Palladium fell 0.8% to $2,370.50, having earlier reached its highest since Jan. 31 at $2,433.
Platinum was up 0.5% at $1,079.50.
“Given the increased tensions with (key producer) Russia, it would stand to reason that there are concerns about supply chain in the platinum group metals,” High Ridge’s Meger said.