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Gold set for gains as Ukraine crisis, inflation lift demand


Non-yielding bullion is considered a safe store of value during uncertain times and a hedge against inflation

Gold was flat on Thursday but prices were set for a second consecutive weekly gain as the Ukraine crisis and broadening inflationary pressures lifted the safe-haven metal’s appeal.

Spot gold was little changed at US$1,979.36 per ounce as of 0201 GMT. US gold futures were down 0.1% at US$1,983.20.

The metal has gained about 1.7% so far in the week. Most markets will be closed on Friday for a holiday.

US President Joe Biden announced an additional US$800 million in military assistance to Ukraine on Wednesday, ahead of a wider Russian assault expected in eastern Ukraine.

Non-yielding bullion is considered a safe store of value during uncertain times and a hedge against inflation.

The benchmark 10-year Treasury yield fell on Wednesday after gaining steadily earlier this month, driven by expectations of more aggressive US Federal Reserve tightening to combat inflation, and reached as high as 2.836% on Tuesday, ahead of US inflation figures.

While gold is considered a hedge against inflation, higher US interest rates and yields increase the opportunity cost of holding bullion.

The US dollar index eased off May 2020 highs following a dip in Treasury yields, making gold less attractive for other currency holders.

Traders now look forward to the European Central Bank meeting later in the day to see whether it is in the same, more hawkish mood as global peers.

Holdings of the world’s largest gold-backed exchange-traded fund, namely SPDR Gold Trust, rose 1% to 1,104.42 tonnes on Wednesday.

Spot silver rose 0.3% to US$25.79 per ounce, platinum was up 0.2% at US$987.97 and palladium rose 1.8% to US$2,357.61.

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