Gold prices rose 1% to a high in more than a month on Monday, approaching the $2,000 an ounce level on concerns over the war between Russia and Ukraine and rising inflationary pressures that prompted investors to seek refuge in the ingot.
Spot gold gained 0.7% to $1,987.43 an ounce, after hitting its highest level since March 11 at $1,998.10. US gold futures advanced 1% to $1,994.
“Increased tensions over the Russia-Ukraine war and widespread inflationary pressures are driving safety demand for gold,” said David Meger of High Ridge Futures.
The gold metal advanced despite the jump in benchmark 10-year US Treasury bond yields to their highest since December 2018, and the strength of the dollar, which tends to dampen appetite for gold among foreign buyers.
Concerns about the economic impact caused by the Covid-19 restrictions in China also supported bullion, according to Meger.
While concerns about accelerating inflation drive gold’s safe-haven appeal, interest rate hikes to curb rising prices could hurt demand for the metal because of the higher opportunity cost of holding bullion, which is not earn interest.
Federal Reserve officials are expected to accelerate the pace of monetary policy tightening when they meet in May.
Among other precious metals, spot silver added 1.1% to $25.97 an ounce, after hitting a high of more than a month at $26.21.