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Gold prices soar to 13-month high on worries of escalating Russia-Ukraine conflict. Image Credit: Bloomberg

Dubai: Gold prices continued to rise in the UAE, with the 24-karat variant currently at Dh235 - up Dh2.75 per gram from Tuesday's Dh232.25.

Meanwhile, the price of 22-karat gold fell to Dh220.75 per gram, 21-karat to Dh210.75 and 18-karat to Dh180.50 in the UAE. Check latest gold prices here.

Globally, gold prices remained near a 13-month high of around $1,935 (Dh7,107) on fears that Russia's invasion of Ukraine could turn more brutal, aiding demand for safe-haven assets as commodity investors weigh the potential fallout and sanctions.

Even after the drop from prior weeks' super-charged gains of between $1,950-$1,970, Dubai-based analysts and retailers currently evaluate that gold is still too pricey for most shoppers. A gain of $100 an ounce last week, then a drop, and then going up by $50 – no one can predict with certainty about what’s next for gold.

Analysts opined that they had not seen gold prices rise so fast and in such a short time as they did when the first missiles were exchanged across the Russia-Ukraine border. Moreover, worries are rising on possible harm to global economic growth, which has helped the yellow metal.

However, bullion dipped after jumping almost 2 per cent in the previous session. It rose by the most since May last month amid mounting concern that the raft of penalties against Russia could dim the outlook for global growth and further stoke inflation.

Gold prices to stay high?

As investors assess the impact of aggressive sanctions against Russia over its invasion of Ukraine, a calmer risk tone in commodity markets were seen as a key factor that acted as a headwind for the safe-haven metal's sky-high prices, analysts further revealed, meaning that prices are expected to stabilise and not rise as much for now. 

Holdings in exchange-traded funds backed by the metal have risen for two straight months. The small downward move on Wednesday is likely a technical pullback, said Margaret Yang, a strategist at DailyFX. Officials from the US and allied nations expect more indiscriminate tactics as Russian forces seek to suppress resistance in Ukraine.

Threats to supplies of grain, energy and metals are adding to price pressures, with a Bloomberg index of commodities jumping the most since 2009 to a record high. Traders are now dialing down rate-hike bets, including pricing out any risk of a half-point March liftoff by the Federal Reserve. 

"With the recent geopolitical incursions, I expect there to be support for gold at these levels," said David Chao, a global market strategist for Asia Pacific ex-Japan at Invesco. Bullion could "experience upwards momentum as long as the war continues, which could be a while," he said.

Spot gold retreated 0.4 per cent to $1,938.18 an ounce after rising 1.9 per cent on Tuesday and 6.2 per cent in February. Palladium added 1.4 per cent after closing up 3.9 per cent on Tuesday on concerns over potential supply disruptions. Russia produces about 40 per cent of the palladium mined globally. Silver and platinum dropped.

- with inputs from Bloomberg