By Rahul Paswan
(Reuters) – Gold prices fell from a one-week high on Wednesday as the dollar strengthened, although safe-haven demand linked to tensions between Russia and Ukraine helped limit further losses.
Spot gold fell 0.4% to $2,622.22 an ounce as of 0833 GMT, after hitting its highest level since November 11 earlier in the session. U.S. gold futures fell 0.2% to $2,625.30.
The US dollar recovered from a one-week low. A stronger U.S. currency makes bullion more expensive for foreign buyers. [USD/]
The current decline in gold prices can be attributed to profit-taking and a stronger dollar, but developments in the situation between Russia and Ukraine are crucial and should be closely monitored, says Zain Vawda, market analyst at MarketPulse by OANDA.
Russian President Vladimir Putin lowered the threshold for a nuclear strike in response to a wider range of conventional attacks, days after reports said Washington had allowed Ukraine to use US weapons to strike deep into Russia.
Meanwhile, several Federal Reserve officials are expected to speak this week, which could provide insight into the future path of interest rates. Traders see a 59.1% chance of a 25 basis point cut in December and a 40.9% chance of rates remaining stable.
“A pause in Fed rate cuts in December could dampen gold prices in the short term, but the easing monetary cycle, macroeconomic and geopolitical uncertainty and healthy physical demand will maintain positive sentiment in the gold market.” , ANZ said in a note.
Recent US economic data and expectations that Republicans will pursue more inflationary policies have increased expectations that interest rates will stay higher for longer. Bullion is considered a hedge against inflation, but higher interest rates reduce the appeal of holding non-performing assets.
Among other metals, spot silver fell 0.9% to $30.93, platinum fell 1.1% to $963.03 and palladium fell about 1% to $1,025.00.
(Reporting by Rahul Paswan in Bengaluru; Editing by Sherry Jacob-Phillips)
