Gold regains some momentum on latest Russia jitters; focus on Fed

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Gold rose on Wednesday after Russian

President Vladimir Putin’s partial mobilization announcement

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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.

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“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

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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

Neely)