Ukraine tension pulls world gold prices up

 Ukraine tension pulls world gold prices up

Gold is currently trading around $1,843 an ounce, driven by strong haven demand.

Closing the trading session on January 24, each ounce of world gold spot increased by 7.6 USD to 1,843 USD. During the session, the price at one point reached close to 1,828 USD.

Prices rose as geopolitical tensions around Ukraine pushed up demand for haven assets. NATO says it is sending more forces in Eastern Europe as Russia increases its military presence on the border with Ukraine.

World gold price movements in recent sessions.

World gold price movements in recent sessions.

"Ukraine is a positive factor for gold. Fed policy will eventually be cautious tightening, as the agency believes this is just a transition," Ed Moya, senior market analyst at brokerage firm OANDA said.

US stocks yesterday sold off at the beginning of the session due to Russia-Ukraine tensions and expectations that the Fed would tighten monetary policy faster than expected to curb inflation. Michael Hewson, market analyst at CMC Markets, said that the Fed is unlikely to have a big impact on gold right now "as markets are more concerned about Eastern Europe", especially when the monthly rate hike 3 has long been predicted.

However, the precious metal is also under some pressure from the safe-haven cash flow into the US dollar. Besides, gold does not pay fixed interest, so it is less attractive when interest rates rise.

"We think gold's current rally is temporary, unlikely to last if the wave of haven-buying recedes as the Fed resolves market concerns and the economic outlook brightens," he said. Carsten Menke, analyst at Julius Baer said.