Gold failed to retest the US$1,700 mark on Thursday, but gained on geopolitical concerns after Vladimir Putin said he will pour more troops into his war against Ukraine while threatening to use nuclear weapons, offering support to the metal that has been out of favor as a safe haven with the dollar and bond yields near multi-year highs.
Gold for December delivery closed up US$5.40 to US$1,681.10 per ounce, after earlier touching US$1,693.50.
The rise follows on a late Tuesday speech from Putin, who said Russia will raise 300,000 new troops for its war on Ukraine, where it surrendered large swathes of occupied territory in recent fighting, while looking to annex portions of Ukraine it currently controls and promised nuclear retaliation for any attacks on Russia.
The threat of a wider war is reviving gold's role as a safe haven, which has recently been overshadowed by rising interest rates and a dollar that is trading near the highest in 20 years, supported by the Federal Reserve's 75 basis-point increase to US interest rates on Wednesday and its promise that rates will rise again until inflation is under control.
"Putin's increasingly desperate measures and threats regarding his war in Ukraine helped support gold and shield it from losses as the dollar and yields rose. Geopolitical support aside, the yellow metal may struggle as long yields continue to rise and the market continues to price inflation sub 3% in a year from now," Saxo Bank noted.
The ICE dollar index was last seen up 0.54 points to 111.18, after touching a 20-year high of 111.81 a day earlier. The yield on the US 10-year note was last seen up 16.1 basis points to 3.694%, after earlier touching 3.712%, the highest since 2010.
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