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Gold trades stable as Ukraine concern offsets aggressive Fed bias

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By Bharat Gautam

March 24 (Reuters) – Gold looked for direction on Thursday, as support for safe-haven demand from Russia’s invasion of Ukraine was offset by signs that Federal Reserve officials may be more aggressive in control inflation.

* Spot gold was up 0.1% at $1,945.56 per one by 1026 GMT, while US gold futures were up 0.3% at $1,943.10.

* “Gold’s rally is severely capped by the Fed’s aggressive rate hike bias, although the precious metal remains well supported by lingering fears of the global fallout from the Russia-Ukraine war,” Han Tan said, Chief Market Analyst at Exinity.

* Gold is highly sensitive to rising interest rates, which raises the opportunity cost of holding bullion.

* Last week, the US central bank raised the cost of borrowing by 25 basis points, disappointing parts of the market that had expected a higher rise. Since then, Fed policymakers have advocated a more aggressive approach to curbing inflation.

* The stance of further monetary tightening has boosted the dollar and the yield on US 10-year Treasury bonds, while putting pressure on gold, which pays no interest.

* With the rise of bullion-backed exchange-traded funds, “gold could attract more suitors clinging to the precious metal as a haven and hedge against inflation, especially if stagflation risks amplify in the near term,” He said tan.

* In other precious metals, spot silver was trading flat at $25.07 an ounce; platinum around 0.8%, about 1,012.49 dollars; and palladium was down 0.3% to $2,504.70.

(Edited in Spanish by Javier López de Lérida)

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