[Click here for an interactive chart of gold prices]
Meanwhile, US equities gained amid positive economic data and reports that Russia President Vladimir Putin is ready to hold talks with the Ukraine government.
On Thursday, US President Joe Biden imposed additional penalties on Russia, though the sanctions stopped short of barring the nation from the Swift international payments system, and the nation’s energy supplies were also spared.
Bullion pulled back following these developments, after surging to the highest since 2020, as traders continue to weigh the effects of these sanctions on Europe’s worst security crisis since World War II.
The turnaround in gold prices was due to “a combination of a heavy overbought market running out of momentum ahead of $2,000, fears Russia would need to sell gold to prop up the ruble and President Biden’s sanctions underwhelming the market in terms of impact,” said Ole Hansen, head of commodity strategy at Saxo Bank A/S, in a Bloomberg report.
“We think the price drop is premature, there is a risk of further escalation in the conflict and it could be just a temporary correction,” Commerzbank analyst Daniel Briesemann told Reuters.
“The risk premium and safe haven demand will continue to support gold, but the upside is limited by the possible rate hike by the US Federal Reserve this March,” Xaio Fu, head of commodities markets strategy at Bank of China International, cautioned.
(With files from Bloomberg and Reuters)
