You are here: Home » Markets » Commodities » Precious Metals
Business Standard

Gold regains some poise on latest Russia jitters; focus on Fed rate hike

Spot gold was up 0.7% at $1,674.79 per ounce by 1205 GMT. U.S. gold futures rose 0.7% to $1,683.

Gold Prices | Vladimir Putin | US Federal Reserve


Photo: Bloomberg

By Brijesh Patel

(Reuters) - Gold rose on Wednesday after Russian President Vladimir Putin's partial mobilisation announcement re-ignited some safe-haven interest in bullion, although a strong dollar and expected U.S. rate hikes capped gains.

Spot gold was up 0.7% at $1,674.79 per ounce by 1205 GMT. U.S. gold futures rose 0.7% to $1,683.

Putin said he had signed a decree on partial mobilisation beginning on Wednesday, saying he was defending Russian territories and that the West wanted to destroy the country.

"The increased mobilisation, the escalation in that region and fears of escalation in terms of the weapons that are used are factors helping gold to some extent," said independent analyst Ross Norman.

"However, obviously we've got dollar strength... and a widely predicted 75 basis points increase in the Fed funds rate which hasn't helped gold particularly in recent times."

Gold's gains were kept in check as investors also sought refuge in the dollar, which scaled a fresh two-decade high versus a basket of other currencies, making bullion more expensive for overseas buyers. [USD/]

Focus remained on the Fed's policy decision due at 1800 GMT, with traders pricing in an 81% chance of another 75 basis-point rate hike and a 19% probability of a 100 bp increase.

While gold is considered a safe investment during political and financial uncertainties, rising rates dull its appeal since it yields no interest.

"So far, key thresholds haven't proven to be strong supports for gold so if the Fed does surprise with a 100-basis point hike then the price could quickly plunge to a fresh low for the year with the potential for a fall below $1,600," Kinesis Money analyst Rupert Rowling said in a note.

Reflecting sentiment, holdings of the world's largest gold-backed exchange-traded fund, the SPDR Gold Trust, on Tuesday registered their biggest one-day outflow since July 18.

Spot silver gained 1.1% to $19.52 per ounce, platinum rose 1% to $931.33, and palladium climbed 0.4% to $2,176.83.


(Reporting by Brijesh Patel in Bengaluru; editing by Elaine Hardcastle, Kirsten Donovan)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Wed, September 21 2022. 19:52 IST