Gold eases off 9-month peak as investors eye Ukraine developments

Gold Bullion from the American Precious Metals Exchange (APMEX) is seen in this picture taken in New York
Gold Bullion from the American Precious Metals Exchange (APMEX) is seen in this picture taken in New York, September 15, 2011. REUTERS/Mike Segar
  • West poised to announce sanctions against Russia
  • Silver hits one-month high

Feb 22 (Reuters) - Gold hit its highest in nearly nine months on Tuesday before pulling back as investors waiting for developments in the Ukraine crisis repositioned near the pivotal $1,900 an ounce mark.

Spot gold was down 0.2% at $1,902.71 per ounce by 14:06 ET (1906 GMT), having hit its highest since June 1 at $1,913.89. U.S. gold futures settled 0.4% higher at $1,907.40.

Wall Street's main indexes slumped as the prospect of harsh Western sanctions against Russia over its conflict with Ukraine kept investors on edge, while oil prices hit their highest level since 2014.

The Biden administration could deprive Russia of a vast swath of low- and high-tech U.S. and foreign-made goods, people familiar with the matter told Reuters, if it further invades Ukraine. read more

"It's not surprising to see gold well supported in this environment given its traditional safe-haven play," said David Meger, director of metals trading at High Ridge Futures.

However, inflationary pressures have been a key driver of gold's performance over the last several weeks in its sideways to higher trend and interest rate increases may not overshadow this trend, Meger said.

Gold is considered a hedge against inflation and political risks. But interest rate hikes, especially by the Federal Reserve, tend to dim the appeal of bullion, which pays no interest.

Analysts attributed gold's slight pullback to some profit-taking. Saxo Bank analyst Ole Hansen said this was "because there is obviously at this point quite an elevated risk premium baked into the price of gold".

Meanwhile, spot silver was up 1.1% at $24.19 an ounce after touching its highest in a month at $24.35. Palladium fell 0.8% to $2,368.84, having earlier reached its highest since Jan. 31 at $2,433.

Platinum rose 0.1%to $1,075.09.

"Given the increased tensions with (key producer) Russia, it would stand to reason that there are concerns about supply chain in the platinum group metals," High Ridge's Meger said.

Reporting by Bharat Govind Gautam and Seher Dareen in Bengaluru; Editing by Emelia Sithole-Matarise and Krishna Chandra Eluri

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Seher oversees and writes market reports with the commodities and energy team in Bangalore round-the-clock and monitors newsworthy events in the resources space.