Gold near 2-week high

February 9, 2022: Gold prices were steady on Wednesday near a two-week high scaled in the previous session, as inflationary risks and Russia-Ukraine tensions underpinned the safe-haven metal, despite the prospect of an aggressive rate hike by the U.S. central bank.

FUNDAMENTALS

Spot gold was steady at $1,825.89 per ounce by 0108 GMT, hovering close to Tuesday's high of $1,828.68. U.S. gold futures dipped 0.1% to $1,826.30.

Benchmark 10-year U.S. Treasury yields were steady but slightly lower compared with the November 2019 high reached in the previous session. [USD/][US/]

U.S. inflation data for January is due on Thursday and expectations are for a 7.3% annual raise, according to a Reuters poll, after robust labour data last week.

Market participants are pricing in more than a 70% chance of a 25 basis point hike and a nearly 30% chance of a 50 bp hike at the U.S. Federal Reserve's mid-March meeting, according to CME's FedWatch Tool.

Gold is highly sensitive to rising U.S. interest rates, which increase the opportunity cost of holding non-yielding bullion. Higher rates also boost the dollar, pressuring the greenback-priced precious metal.

The European Central Bank will do everything necessary to steer inflation back to its 2% target over time, Bank of France Governor Francois Villeroy de Galhau said on Tuesday.

French President Emmanuel Macron, the first leader of a major Western power to meet Vladimir Putin since Russia massed troops near Ukraine, said he believed steps can be taken to de-escalate the crisis and called on all sides to stay calm.

Among other metals, silver was steady at $23.18 per ounce, platinum fell 0.5% to $1,026.94, and palladium was down 0.4% at $2,239.12.

Reuters