Gold prices edged higher on Wednesday as concerns of an escalation in the Russia-Ukraine conflict increased safe-haven bids for the precious metal, although a firmer U.S. dollar capped bullion’s gains.

Spot gold was up 0.2% at $1,969.76 per ounce, as of 0609 GMT, after hitting a near one-month peak of $1,978.21 on Tuesday. U.S. gold futures were flat at $1,975.80.

“Gold is benefiting from some safe-haven demand this week as inflation fears grow, China growth stumbles and the war in the Ukraine gets set for round two,” said OANDA senior analyst Jeffrey Halley.

Russian President Vladimir Putin described the on-and-off peace negotiations as “a dead-end situation” on Tuesday, while U.S. President Joe Biden said for the first time that Moscow’s invasion of Ukraine amounts to genocide.

The dollar index firmed near May 2020 highs, making gold less attractive for overseas buyers, after reassurance from U.S. Federal Reserve Governor Lael Brainard that the central bank will stay the course on hiking interest rates.

Although gold is considered a hedge against inflation and geopolitical risks, interest rate hikes would raise the opportunity cost of holding non-yielding bullion.

“March inflation came in at up 8.5%, year-on-year, which is a 40-year high, inflation historically bullish for hard commodities,” said Michael Langford, director at corporate advisory AirGuide.

“That being said gold has no attributable yield and in a high interest rate environment, will be less desirable relative to other asset classes. I see gold having some minimal upside but medium to longer-term more likely to fall in price.”

Spot gold faces a strong resistance at $1,975 per ounce, according to Reuters technical analyst Wang Tao.

Spot silver was up 0.4% at $25.46 per ounce, platinum rose 0.7% to $972.51 and palladium gained 3.1% to $2,398.15.