Gold prices inched up on Thursday, as inflation worries intensified by the Ukraine war and mounting sanctions on Russia eclipsed pressure from the U.S. Federal Reserve's aggressive policy stance.
Spot gold rose 0.3% to $1,930.80 per ounce. U.S. gold futures gained 0.6% to $1,934.4.
While there is "the guidance from the Fed that it wants to increase interest rates faster going forward, on the other side we still see inflation increasing," said UBS analyst Giovanni Staunovo said. "We continue to see relatively strong demand for physical (gold) bars and coins across the board with market uncertainty and concerns about economic growth down the road because of high energy prices."
Minutes of the Fed's March meeting showed deepening concern among policymakers that inflation had broadened through the economy, with "many" participants prepared to raise interest rates in 50-basis-point increments in coming policy meetings.
The central bank's hawkish stance buoyed the benchmark U.S. 10-year Treasury yields and the dollar near multi-year highs.
Rising U.S. interest rates and higher yields increase the opportunity cost of holding bullion, which is also viewed as a hedge against rising inflation. Meanwhile, a stronger dollar also makes gold less attractive for other currency holders.
"Focus will shift to U.S. inflation data with a higher print potentially favoring gold upside," DailyFX analyst Warren Venketas wrote in a note, adding that geopolitics will persist in influencing gold prices.