(Reuters) – Gold stabilized below the $1,900 level on Wednesday after hitting a nine-month high in the previous session due to the Ukraine crisis, as investors focused on inflationary risks and the likelihood monetary policy tightening by central banks.
Spot gold was flat at $1,895.43 an ounce at 0731 GMT, after hitting its highest level since June 1 at $1,913.89 an ounce in volatile trading on Tuesday. US gold futures GCv1 fell 0.4% to $1,899.70.
“The main catalyst here is the diminishing of this escalation risk which basically we may have exhausted the worst of this crisis, at least in terms of new uncertainty,” said Ilya Spivak, currency strategist at DailyFX. , while referring to the crisis between Russia and Ukraine.
The United States, the European Union and Britain have announced plans to target banks and elites, while Germany has halted a major gas pipeline project from Russia, which they say has gathered more of 150,000 soldiers near the borders of Ukraine. Moscow denied planning an invasion.
US Treasury yields edged higher on Tuesday as markets see rates rise, with the US Federal Reserve expected to move in March.
Money markets are pricing in just a 36.5% chance of a 50 basis point rate hike next month, down from around 60% recently.
Higher yields and rising interest rates reduce the attractiveness of bullion by increasing the opportunity cost of holding gold that does not pay interest.
“As the Fed continues to tighten and real rates continue to rise, markets are not moving in a straight line, but the overall direction for gold after the ebb from this Ukraine crisis is down,” Spivak said.
Gold could break through $1,750 and test the $1,700 per ounce level, he added while outlining the technical outlook for bullion over the next six months.
Spot silver was flat at $24.09 an ounce, platinum rose 0.2% to $1,078.08 and palladium rose 0.3% to $2,354.54.
(Reporting by Asha Sistla in Bengaluru; Editing by Rashmi Aich)