 "Gold")
By Bharat Gautam
(Reuters) - Gold prices rose on Thursday toward an eight-month high scaled earlier this week as Treasury yields dipped, while reports of mortar fire in eastern Ukraine also pushed investors to opt for safe-haven bullion.
Spot gold was up 0.4% at $1,876.41 per ounce, as of 0624 GMT, hovering near a June high of $1,879.48 hit on Tuesday. U.S. gold futures gained 0.4% to $1,878.40.
Russian-backed separatists in eastern Ukraine accused government forces on Thursday of opening fire on their territory four times in the last 24 hours. It was not immediately clear how serious the incidents were.
The market is really sensitive to news flow around the geopolitics of Ukraine and Russia, said Nicholas Frappell, a global general manager at ABC Bullion.[MKTS/GLOB]
The U.S. dollar clawed back ground after reports of the attack sent investors worried about a wider war scurrying for safety. [USD/]
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Gold was also supported as minutes of the Federal Reserve's meeting last month hinted that the U.S. central bank won't be as aggressive as feared in tightening policy.
"Gold has been range-bound between $1,845 and $1,880, and should remain here until either geopolitical tensions have eased a little, or the Fed commits to show that they are really still looking to remove liquidity and raise interest rates faster," said Brian Lan, managing director at dealer GoldSilver Central.
However, with high inflation, "even if they raise interest rates, real interest rates will still be largely negative," Lan cautioned. Hence, after an initial knee-jerk reaction to a hike, investors will realise that "gold is still a good asset to hold in this environment."
Higher interest rates tend to increase the opportunity cost of holding non-interest-paying gold, but a fall in U.S. Treasury yields to below 2% supported bullion. [US/].
Spot silver fell 0.1% to $23.53 per ounce, platinum firmed 0.7% to $1,068.57, a three-month high, while palladium rose 1.8% to $2,321.38.
(Reporting by Bharat Govind Gautam in Bengaluru; Editing by Sherry Jacob-Phillips)
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