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Gold declined — but remained near a 13-month high — on fears that Russia’s invasion of Ukraine could turn more brutal, aiding demand for haven assets as investors weigh the potential fallout and sanctions.

Bullion dipped after jumping almost 2 percent in the previous session. It rose by the most since May last month amid mounting concern that the raft of penalties against Russia could dim the outlook for global growth and further stoke inflation.

Holdings in exchange-traded funds backed by the metal have risen for two straight months. The small downward move yesterday was likely a technical pullback, said Margaret Yang, a strategist at DailyFX.

Officials from the US and allied nations expect more indiscriminate tactics as Russian forces seek to suppress resistance in Ukraine. US President Joe Biden said the war could leave Russia with a weaker economy.

Threats to supplies of grain, energy and metals are adding to price pressures, with a Bloomberg index of commodities jumping the most since 2009 to a record high.

Traders are now dialling down rate-hike bets, including pricing out any risk of a half-point March lift-off by the Federal Reserve. Chair Jerome Powell was due to speak before Congress later yesterday.

“With the recent geopolitical incursions, I expect there to be support for gold at these levels,” said David Chao, a global market strategist for Asia Pacific ex-Japan at Invesco. Bullion could “experience upwards momentum as long as the war continues, which could be a while,” he said.

Spot gold retreated 0,5 percent to US$1 935,58 an ounce at 11:36am Singapore time after rising 1,9 percent on Tuesday and 6,2 percent in February. Palladium added 0,4 percent after closing up 3,9 percent on Tuesday on concerns over potential supply disruptions.

Russia produces about 40 percent of the palladium mined globally. Silver dropped, while platinum was little changed.  – Bloomberg