Gold Prices Stable, Russia-Ukraine Conflict Supports Safe Haven Demand

UNSPLASH ILLUSTRATION

JAKARTA - Gold prices were steady in Asian trade on Thursday afternoon, as the Russia-Ukraine conflict kept investors alert and supported demand for the safe-haven metal, countering pressure from rising risk assets.

Meanwhile, supply concerns pushed palladium prices to their peak in the last seven months.

Launching Antara, Thursday, March 3, gold in the spot market was trading at 1,926.10 US dollars per ounce at 0726 GMT. Meanwhile, US gold futures advanced 0.4 percent to trade at 1,930.50 dollars an ounce, after falling 1.1 percent overnight.

Ukraine's second-largest city, Kharkiv, suffered heavy bombardment on Wednesday, March 2, while a new round of sanctions by the United States will surely make it difficult for Russia to modernize its oil refineries.

Asian stocks rose after reassuring comments from the US Federal Reserve to "carefully" raise interest rates at its March meeting, but be prepared to move more aggressively if inflation does not fall as quickly as expected.

“This is my push effect, your pull… The potential for higher interest rates from better economic activity is clearly negative for gold, which is beset by geopolitical concerns”, said Michael McCarthy, chief strategist at Tiger Brokers, Australia.

Although gold is considered a safe investment during political and economic uncertainty, rising US interest rates increase the chances of losing holding non-yielding gold.

"At one stage, the reality of a better economic outlook will weigh on gold. So one potential scenario is a spike to all-time highs over the next two weeks before the gravitational effects of higher interest rates start pulling gold prices down again", McCarthy added.

Palladium, used by automakers in catalytic converters to curb emissions, jumped 2.0 percent to 2,721.78 dollars an ounce, after hitting a new high since July at 2,735.18 dollars earlier in the session.

With Western countries having raised sanctions on Russia, which accounts for 40 percent of global palladium production, analysts warn of further supply constraints for the metal in an already tight market.

Another precious metal in the spot market, silver rose 0.3 percent to trade at 25.34 dollars an ounce, while platinum gained 1.3 percent to trade at 1,085.35 dollars an ounce.