By Eileen Suring
(Reuters) – Gold turned positive on Wednesday as risk-off sentiment dominated financial markets amid the prospect of more Western sanctions against Russia, although aggressive US bets for a rate hike kept bullion near a one-week low.
Spot XAU Gold = up 0.3% to $1,928.96 an ounce by 1005 GMT. US GCv1 gold futures rose 0.3% to $1,932.40.
Gold touched its lowest level since March 29 earlier, after Federal Reserve Governor Lyle Brainard scared investors about possible aggressive measures by the central bank to control inflation. (Full Story)
Brainard’s comments pushed the US dollar and Treasury yields to multi-year highs, reducing gold’s allure. US dollar / US dollar /
“Gold could fall back below $1,900 if the FOMC meeting minutes or Fed speech in the coming days provide more hawkish evidence,” said Han Tan, senior market analyst at Exinity.
Higher US interest rates and higher yields increase the opportunity cost of holding non-yielding bullion, which is also used as a hedge against rising inflation.
Investors were waiting for the minutes of the Federal Reserve’s latest policy meeting at 1800 GMT on Wednesday.
“However, further sanctions against Russia that are adding to inflationary pressures and further bleakening the global economic outlook should provide notable support to spot gold,” Tan added.
Global stock prices plunged as the United States and its allies prepared new sanctions on Moscow over the killings of civilians described by Ukraine as “war crimes,” while Russian artillery bombed the Ukrainian cities of Mariupol and Kharkiv. (Full story) MKTS / GLOB
“There are still a number of things that could trigger another rally in gold. Inflation continues to rise beyond current expectations, talks between Ukraine and Russia collapse or a recession occurs,” said Craig Erlam, chief market analyst at OANDA.
Among other precious metals, spot silver XAG=0.2% rose to $24.37 per ounce, platinum XPT fell 0.1% to $967.56, and palladium XPD rose 0.9% to $2257.27.
(Reporting by Elaine Suring in Bengaluru; Editing by Amy Karen Daniel)
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