Gold was down on Wednesday morning in Asia, coming down from an eight-month high hit during a volatile previous session. Easing fears of a Russian invasion of Ukraine negated the support to the yellow metal from weaker bond yields.
Gold futures edged down 0.11% to $1,854.25 by 12:22 AM ET (5:22 AM GMT). They hit their highest level since June 2021 on Tuesday, before changing course to close almost 1% lower. The dollar, which normally moves inversely to gold, inched up on Wednesday while U.S. Treasury yields fell.
Asian shares rebounded from recent losses, with a Russian announcement that it would withdraw some troops from the border with Ukraine diffusing ears of an armed conflict in the area.
Looking ahead, the more fungible dollar is the preferred safe-haven to gold among core investors and could fall on any further de-escalation in the Ukraine crisis, prompting a rally in gold and vice-versa, AirGuide director Michael Langford told Reuters.
The U.S. Federal Reserve is widely expected to hike interest rates in March 2022, with a Reuters poll predicting a 25 basis-point increase. However, a growing minority predicts that the central bank will opt for a more aggressive half-point hike to cool high inflation.
The Fed also releases the minutes from its last meeting later in the day.
“Besides weekly momentum indicators and buying the ‘dip’ indicating that the path of least resistance is higher, most traders do expect higher volatility to be a main-stay of gold markets going forth as rumors and market whispers increase,” Phillip Futures analyst Avtar Sandu said in a note.
In Asia Pacific, data released earlier in the day in china showed that the consumer price index grew 0.9% year-on-year and 0.4% month-on-month in January. The data also showed that the producer price index rose 9.1% year-on-year.
In other precious metals, silver inched down 0.1%, while platinum edged up 0.2% and palladium jumped 2.7%.