Gold eases from 3-month highs, palladium investors wary of Russia-Ukraine crisis

Gold prices fell on Monday as the U.S. dollar advanced, with worries around the Russia-Ukraine crisis limiting losses of the safe-haven metal and keeping palladium traders on tenterhooks

Spot gold fell 0.3% to $1,855.40 per ounce by 1211 GMT. On Friday, prices jumped the most since mid-October and hit their highest level since Nov. 19. U.S. gold futures rose 0.8% to $1,857.40

“Gold had a classic safe-haven jump on Friday… (but) the problem with safe-haven spikes is that they never really last for that long,” said Saxo Bank analyst Ole Hansen. “At this point, gold is taking a breather waiting for further news on the geopolitical front.

Russia might create a surprise pretext for an attack on Ukraine, the United States said on Sunday. However, Moscow denies any such plans and has accused the West of “hysteria”, even as it has more than 100,000 troops massed near Ukraine

“We also believe that any further escalation of the situation will deter the Fed from raising interest rates by 50 basis points in March, as this could spark excessive turmoil on the financial markets,” Commerzbank said in a note.

The dollar gained 0.2%, while benchmark U.S. 10-year Treasury yields edged higher, raising the opportunity cost of holding non-interest-paying gold

“A modestly stronger dollar is marginally weighing on gold price today. We expect higher volatility in the near term, with prices driven by escalation or de-escalation news (on Ukraine),” UBS analyst Giovanni Staunovo said

Auto-catalyst metal palladium was steady at $2,306.18 per ounce, having hit an over-two-week peak.

“It looks like the percentage of palladium they (Russia) export as a percentage of the global production is pretty close to 50% and that obviously does make the metal extremely exposed to any temporary reductions in supplies from Russia should the conflict escalates from current levels,” Hansen adde