Gold prices on Tuesday hit a 13-month high on Indian commodities exchange MCX as tensions between Russia and the West mount over Ukraine, prompting investors to shun riskier assets and opt for safe-haven bullion. Gold April future contract rose nearly 1.5 percent to Rs 50,323 due to depreciation in rupee. In the last two months, rupee depreciated by 1.80 percent to trade at 75.66 levels.

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On the other hand, COMEX gold prices climbed to an eight-month high. COMEX spot gold was up 0.3 percent at $1,876.71 per ounce at 0350 GMT, after hitting its highest level since June 11 at $1,878.88 earlier in the day. US gold futures rose 0.5 percent to $1,879.00.

"Gold may test $1,920 to $1,950 levels very soon. And on mcx it may test 51,000 to 52,000 levels," said Anuj Gupta, VP Research at IIFL Securities.

Due to the Ukraine crisis, gold is supported through the inflation channel because of higher crude oil prices and through the risk aversion channel because of lower stocks, Reuters quoted as saying Stephen Innes, managing partner at SPI Asset Management.

"If we lose that Ukraine impulse, then gold comes off quite quickly," Innes said. Asian shares dropped as investors contemplated the implications of a potential imminent Russian invasion of Ukraine.

"The (gold) market seems to be ignoring major central banks right now because investors are lost in the fog of war and it becomes very difficult to have a salient macro or fundamental view in this type of market where you really have to just go trade on a hair trigger," Innes said.

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Bullion is usually perceived as a hedge against geopolitical conflicts, and with simmering tensions surrounding Ukraine, spot gold has risen about 5 percent since January 31, set for a 10th session of gains in 12.

Supporting bullion on Tuesday, benchmark U.S. 10-year Treasury yields eased, decreasing the opportunity cost of holding non-interest-paying gold, while a slightly weaker dollar helped make the metal more attractive for overseas buyers.

Also Read: Asian shares slip amid fears of Russian invasion of Ukraine

US Federal Reserve officials continued sparring over how aggressively to begin interest rate hikes at their March meeting, with a final inflation reading just ahead of the two-day session taking on potentially outsized importance.

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Among other precious metals, spot silver gained 0.3 percent to $23.91 per ounce and platinum added 0.1 percent to $1,029.19, while palladium dipped 0.3 percent to $2,353.18.

- With agency inputs

(Edited by : Bivekananda Biswas)

First Published:Feb 15, 2022 10:37 AM IST