Gold rose on Wednesday after Russian
President Vladimir Putin’s partial mobilization 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 0.5% at $1,670.57 per ounce as of
0803 GMT. U.S. gold futures rose 0.6% to $1,680.40.
Putin said he had signed a decree on partial mobilization
beginning on Wednesday, saying he was defending Russian
territories and that the West wanted to destroy the country.
“The increased mobilization, the escalation in that region
and fears of escalation in terms of the weapons that are used
will be driving a fair factor behind 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.”
But 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.
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 bps increase.
While gold is considered a safe investment during political
and financial uncertainties, rising rates dull its appeal since
it yields no interest.
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.
“It seems unlikely that gold ETF inflows will sustainably
rebound until traders crystalise a turn in the Fed tightening
cycle and/or there is consensus on a U.S./global recession,”
Citi Research said in a note.
Spot silver edged 0.2% higher to $19.34 per ounce,
platinum gained 0.3% to $924.56, while palladium
eased 0.2% to $2,163.75.
(Reporting by Brijesh Patel in Bengaluru; editing by Jason