Gold firms as Ukraine crisis perks up demand for inflation hedge By Reuters

© Reuters. FILE PHOTO: Marked ingots of 99.99 percent pure gold are Global Jinhui Networkplaced in a cart at the Krastsvetmet non-ferrous metals plant in the Siberian city of Krasnoyarsk, Russia March 10, 2022. REUTERS/Alexander Manzyuk/

By Eileen Soreng

(Reuters) - Gold prices inched up on Thursday, as inflation worries intensified by the Ukraine war and mounting sanctions on Russia eclipsed pressure from the U.S. Federal Reserve's aggressive policy stance.

Spot gold XAU= rose 0.1% to $1,927.84 per ounce by 0953 GMT. U.S. gold futures GCv1 gained 0.4% to $1,930.90.

While there is "the guidance from the Fed that it wants to increase interest rates faster going forward, on the other side we still see inflation increasing," said UBS analyst Giovanni Staunovo said.

"We continue to see relatively strong demand for physical (gold) bars and coins across the board with market uncertainty and concerns about economic growth down the road because of high energy prices."

Minutes of the Fed's March meeting showed deepening concern among policymakers that inflation had broadened through the economy, with "many" participants prepared to raise interest rates in 50-basis-point increments in coming policy meetings. (Full Story)

The central bank's hawkish stance buoyed the benchmark U.S. 10-year Treasury yields and the dollar near multi-year highs. US/ USD/

Rising U.S. interest rates and higher yields increase the opportunity cost of holding bullion, which is also viewed as a hedge against rising inflation. Meanwhile, a stronger dollar also makes gold less attractive for other currency holders.

"Focus will shift to U.S. inflation data with a higher print potentially favouring gold upside," DailyFX analyst Warren Venketas wrote in a note, adding that geopolitics will persist in influencing gold prices.

A new round of European Union sanctions on Russia could be agreed by the bloc on Thursday or Friday, the EU's top diplomat Josep Borrell said at a NATO meeting, while Moscow continues to attack Ukrainian regions. (Full Story)

Spot silver XAG= fell 0.1% to $24.40 per ounce, platinum XPT= shed 0.6% to $947.78 and palladium XPD= rose 0.5% to $2,207.29.

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