Gold set for weekly gain as Ukraine, inflation boost demand

[BENGALURU] Gold was flat on Thursday (Apr 14) but prices were set for a second consecutive weekly gain, as the Ukraine crisis and broadening inflationary pressures lifted the safe-haven metal's appeal.

Spot gold was little changed at US$1,979.36 per ounce, as of 2.01 am GMT. US gold futures were down 0.1 per cent at US$1,983.20.

The metal has gained about 1.7 per cent so far in the week. Most markets will be closed on Friday for a holiday.

US President Joe Biden announced an additional US$800 million in military assistance to Ukraine on Wednesday, ahead of a wider Russian assault expected in eastern Ukraine.

Non-yielding bullion is considered a safe store of value during uncertain times and a hedge against inflation.

The benchmark 10-year Treasury yield fell on Wednesday, after gaining steadily earlier this month - driven by expectations of more aggressive Federal Reserve tightening to combat inflation - and reached as high as 2.836 per cent on Tuesday, ahead of US inflation figures.

While gold is considered a hedge against inflation, higher US interest rates and yields increase the opportunity cost of holding bullion.

The US dollar index eased off May 2020 highs following a dip in Treasury yields, making gold less attractive for other currency holders.

Traders now look forward to the European Central Bank meeting later in the day to see whether they were in the same, more hawkish mood as their global peers.

Holdings of the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, rose 1 per cent to 1,104.42 tonnes on Wednesday.

Spot silver rose 0.3 per cent to US$25.79 per ounce, platinum was up 0.2 per cent at US$987.97 and palladium rose 1.8 per cent to US$2,357.61. REUTERS