By Asha Sistla

(Reuters) – Gold prices rose on Wednesday due to concerns about an escalation of the Russia-Ukraine war. However, bullion gained less because the U.S. dollar was stronger.

The price of an ounce of gold was at $1969.61, up 0.2%, by 0400 GMT. It had risen from a close to one month high on Tuesday of $1978.21. The U.S. was down 0.1% to $1,973.70.

Jeffrey Halley (OANDA senior analyst) stated that Gold is benefiting this week from some safe-haven demands as China slows, inflation fears increase and war in Ukraine becomes more serious.

Russian President Vladimir Putin called the ongoing peace talks “a dead-end scenario” Tuesday. Meanwhile, Joe Biden declared for the first-time that Moscow’s incursion in Ukraine amounts to genocide.

Gold prices have stabilized close to May 2020 levels, making it less desirable for international buyers. This was despite assurances from Lael brainard, U.S. Federal Reserve governor, that interest rates will be raised. [USD/]

Gold is considered an insurance against inflation and geopolitical risk. However, rising interest rates would increase the cost of non-yielding bullion.

Michael Langford director of corporate advisory AirGuide stated that March inflation was up at 8.5% year-on-year. This is a high 40-year-high and historically bearish for hard commodities.

Gold has no attributable yield, and will not be as desirable in high-interest rate environments. Gold has some downside, but I expect it to be less expensive in the long-term and lower than its current price.

According to Wang Tao, Reuters technical analyst, spot gold is facing strong resistance at $1975 an ounce. [TECH/C]

Spot silver rose 0.5% to $25.48 an ounce. Platinum rose 0.7% at $971.96, and palladium rose 2.7% to $2.387.77.