Russo-Ukrainian War: Gold holds steady after biggest weekly drop

Gold prices remained stable on Monday after posting its biggest weekly decline since June as investors bet on tighter monetary policy in the United States against the impact of the Russian war in Ukraine.

The metal fell 3.4 percent last week as the Federal Reserve raised interest rates for the first time since 2018. Several officials urged acceleration of policy tightening to curb the hottest inflation in 40 years.

Usually higher interest rates affect non-interest bearing gold. Traders are also considering conflicting messages about the war.

Ukraine has rejected a Russian request to hand over the besieged port city of Mariupol, and an adviser to the Ukrainian president said Russian forces were using “more destructive artillery”.

Conflict and threats from accelerating inflation and slowing growth have helped gold as a haven asset.

“The main underlying driver that continues to support gold prices for higher medium-term trading potential is stagflation risks,” said Kelvin Wong, analyst at CMC Markets in Singapore. “The Federal Reserve has so far failed to cool future inflationary expectations.”

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