Gold prices dip as dollar strengthens towards pandemic high

© Reuters. FILE PHOTO: A machine engraves information on an ingot of 99.99 percent pure gold at the Krastsvetmet non-ferrous metals plant in the Siberian city of Krasnoyarsk, Russia March 10, 2022. REUTERS/Alexander Manzyuk

By Bharat Gautam

(Reuters) - Gold prices fell on Wednesday as the U.S. dollar consolidated at its highest level in more than two years and pressured demand for greenback-priced bullion.

Spot gold was down 0.4% at $1,897.86 per ounce, as of 0612 GMT. U.S. gold futures slid 0.3% to $1,898.80.

"So, $1,900 is clearly a pivotal level for today's session ... looking further out, it's not looking ideal at the moment with the U.S. dollar at a 25-month high," trading firm City Index's senior market analyst Matt Simpson said.

The dollar stood at its highest level since the early days of the pandemic and was heading for its best month since 2015, supported by the prospect of aggressive U.S. rate hikes and on safe-haven flows fanned by slowing growth in China and Europe. [USD/]

A stronger dollar makes greenback-priced gold less attractive for other currency holders. The greenback is also seen as a rival safe-haven asset to gold during economic and political crises.

Headlines from Russia provided some support to gold on Tuesday as investors sought a safe haven, but the Ukraine crisis has not been as much of a bullish story recently for bullion as it was a few weeks ago, and demand from it is unlikely to last through the week, Simpson said.

Russian gas supplies to Poland were halted briefly on Wednesday, data from the European Union gas transmission operators showed, raising fears Russia may turn off the gas taps to Ukraine's allies in what it calls "gas blackmail".

Most Asian stock indices fell as growing fears over the global economy drove investors to dump riskier assets in favour of safe havens such as the U.S. dollar and government bonds. [MKTS/GLOB]

Spot silver gained 0.2% to $23.53 per ounce, platinum dipped 0.1% to $920.23, and palladium firmed 0.6% to $2,200.40.