World gold reaches highest level in more than 2 months

Gold prices rose to a more than two-month high on Tuesday, as geopolitical concerns over Ukraine spurred investors toward safe-haven assets including gold. , before the meeting of the US Federal Reserve (Fed) can give signals on the plan to tighten monetary policy.

Closing the session on Tuesday, the spot gold contract advanced 0.5% to $ 1,852.03 an ounce, after touching the highest level since November 19, 2021 at $ 1,852.65. Gold futures added 0.6 percent to $1,852.50 an ounce.

Russia said it was watching with great concern after the United States put 8,500 troops on alert ready to deploy in the event of an escalation, while Britain urged its European allies to be prepared. sanctions if Russia attacks Ukraine.

"Gold is acting as a safe-haven in a wait-and-see scenario until after tomorrow's Fed meeting announcement," said Bob Haberkorn, senior market strategist at RJO Futures.

Investors are waiting for signals on how positive the Fed is for the rest of the year and whether it will raise interest rates more times to tackle inflation, Haberkorn said.

The Fed is expected to raise interest rates in March 2022 and provide details on how the next tightening will look.

Although gold is seen as a hedge against inflation and geopolitical risks, raising interest rates will increase the opportunity cost of holding the non-yielding metal.

Gold also seems to have eased the pressure from money inflows into the USD, another safe-haven channel, which has hit a 2-week high.

“Although the Fed is likely to announce the start of a rate hike cycle this week, gold can hold up well. Supporting the precious metal is high inflation and increased market volatility,” said UBS analyst Giovanni Staunovo.