Gold hits 3-month high, palladium firms on Russia-Ukraine tensions

Gold rallied to a three-month peak on Monday as fears around the Russia-Ukraine conflict boosted bullion`s safe-haven appeal and sparked fears of supply disruption in the palladium market.

Spot gold was 0.4% higher at $1,866.90 per ounce by 01:44 p.m. ET (1844 GMT), after hitting its highest level since Nov. 16 earlier in the session. U.S. gold futures settled up 1.5% at $1,869.40.

"We got a flight to safety going into gold at the moment as equity markets are selling off. We also have a lot of big economic data coming out this week, and the main focus is inflation," said Bob Haberkorn, senior market strategist at RJO Futures.

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U.S. stock indexes continued their slide on worries over a higher interest rate environment and after the U.S. warned Russia might create a surprise pretext for an attack on Ukraine. [MKTS/GLOB] [.N]

"We believe 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.

Non-yielding gold is considered a hedge against higher inflation.

Markets now await producer prices data for January and minutes from the U.S. central bank`s January monetary policy meeting later this week.

Palladium gained 1.7% to $2,345.86 per ounce, having hit an over two-week peak earlier in the session.

Russia is one of the world`s largest palladium-producing countries and any escalation in its conflict with Ukraine could lead to supply disruptions, analysts said.

"An armed conflict with Ukraine could trigger harsh sanctions against Russian metal exporting industries and dramatically reduce global palladium availability, pushing its price higher," Societe Generale said in a note.

Silver rose 1% to $23.81 per ounce, while platinum was little changed at $1,027.02.