By Bharat Gautam

(Reuters] – On Friday gold eased, consolidating after a volatile week. Investors weighed up possible rate hikes by the U.S. Federal Reserve. Analysts warned that an escalation regarding Ukraine could increase demand for safe havens.

By 1050 GMT, the U.S. was at $1.991.20 an ounce, down 0.3%, however, there were still expectations for a 1.2% weekly increase. U.S. fell 0.1% to $1.997.70

Gold is consolidating now, as the U.S. Federal Reserve interest rate hikes are likely to add some pressure, while investors await additional developments around Ukraine, according to Brian Lan (managing director, dealer GoldSilver Central).

Data showed that U.S. inflation rose in February. This set up expectations of an increase in interest rates next week. That would translate into a higher opportunity cost for holding non-yielding gold.

Firm yields have been dragging on gold for the moment, and are pausing to take a deep breath. But, an escalation of events in Ukraine will throw technical factors “outside the window”, said Michael Hewson chief market analyst at CMC Markets UK. [US/]

When the Ukraine crisis escalated, investors scrambled to secure assets. Gold prices rose to new highs Tuesday. However, they have since fallen to their August 2020 record.

Hewson noted that gold and palladium investors struggle to accurately price everything, due to the headline risk. He also said that anyone who can say they know where anything or gold in the next week is simply being economical with facts.

Spot palladium increased 0.9% to $2.955.62 an ounce. On fears of disruption in supply from Russia (the top producer), the metal reached a record-setting high this week. This is despite Western sanctions against Russia for its invasion.

Silver dropped 0.2% to $25.82 per troy ounce. While platinum rose 0.2% to $1,070.65, this was its worst weekly decline since November.