Gold remained unchanged on Wednesday, after reaching an eight-month high in tumultuous trade the previous session, as lessening Russia-Ukraine tensions offset support from lower bond yields.
As of 0415 GMT, spot gold (XAU=) was barely changed at $1,852.62 per ounce. Gold futures in the United States (GCv1) fell 0.1 percent to $1,854.10.
On Tuesday, gold prices reached their highest level since June of last year before reversing course and closing over 1% down.
The dollar (DXY) strengthened somewhat, weighing on gold demand from international purchasers, but a drop in U.S. Treasury yields reduced the opportunity cost of keeping non-interest-paying bullion, limiting the metal’s losses.
According to Michael Langford, director of business advice AirGuide, the more fungible dollar is the preferred safe haven to gold among core investors and might fall on any further de-escalation in the Ukraine situation, driving a rally in gold and vice versa.
According to a Reuters poll, the Federal Reserve will begin its tightening cycle in March with a 25 basis-point increase in interest rates, but a rising minority believes it will opt for a more aggressive half-point move to tamp down inflation.
“Aside from weekly momentum indicators and buying the ‘dip,’ which indicate that the path of least resistance is higher, most traders expect higher volatility to be a mainstay of gold markets moving forward as rumours and market whispers increase,” Phillip Futures analyst Avtar Sandu wrote in a note.
Spot silver (XAG=) dipped 0.1 percent to $23.33 per ounce, while platinum (XPT=) rose 0.2 percent to $1,027.47 and palladium (XPD=) rose 2.7 percent to $2,309.18.