Gold rises as concerns over Ukraine resurface; Fed minutes in focus

Gold prices rose on Wednesday after the United States said Russia was still building up troops around Ukraine and as markets looked ahead to the release of minutes from the Federal Reserve's last policy meeting.

Spot gold was up 0.9% at $1,869.41 per ounce by 01:39 p.m. EST (1839 GMT). U.S. gold futures settled down 0.8% at $1,871.50.

"Gold is attracting a wide range of investors that are looking for protection as they are realizing that there's not going to be a quick resolution to this (Russian-Ukraine) situation," said Edward Moya, senior market analyst at brokerage OANDA.

"Gold has a clear path higher. However, it will have some moments where it will sell off because of more aggressive Fed tightening expectations."

U.S. Secretary of State Antony Blinken said on Wednesday that Russia has been moving critical units closer to Ukraine's border, despite Moscow's insistence it was pulling back.

Rising geopolitical tensions and U.S. rate hike expectations weighed on sentiment in financial markets, driving investors to seek safe-havens like gold. [MKTS/GLOB]

Investors now await the 2 p.m. EST (1900 GMT) release of the minutes from the U.S. central bank's Jan. 25-26 policy meeting. They are expected to shed more light on policymakers' plans to hike interest rates.

The Fed will kick off its tightening cycle in March with a 25-basis-point hike to its benchmark overnight interest rate, a Reuters poll found.

"Once the Fed starts raising rates and ... if it's faster than expected you'll see gold dropping, but I don't see a collapse," said Bernard Dahdah, an analyst at Natixis.

Rising interest rates increase the opportunity cost of holding non-yielding bullion.

Data released on Wednesday showed U.S. retail sales rebounded sharply in January, but higher prices could blunt the impact on economic growth this quarter.

Elsewhere, silver rose 0.9% to $23.56 per ounce, platinum climbed 3.3% to $1,059.60 and palladium gained 1.4% to $2,279.71.

 

(Reporting by Brijesh Patel and Seher Dareen in Bengaluru; Editing by Amy Caren Daniel and Paul Simao)