Gold prices rose in the second week of April, underpinned by the yellow metal’s appeal as a safe haven amid fears of an increasing Russian offensive in eastern Ukraine, and concerns over rising inflation.

Gold dipped on April 14, just before the Easter break, pressured by a stronger U.S. dollar. Dollar-denominated gold becomes more expensive in terms of other currencies when the greenback strengthens.

Spot prices of gold were down 0.3 percent to $1,971.04 per ounce on April 14. Gold was up around 1.5 percent on the week.

Worries that the fighting will intensify in east Ukraine, have boosted the safe haven appeal of gold to investors.

Gold often benefits from increased investor demand at times of heightened geo-political uncertainty.

The latest rise in the U.S. annualised inflation rate to 8.5 percent has also increased the appeal of gold as a haven.

“Inflationary pressures are riding particularly high, boosted by the perhaps unintended adverse consequences which have impacted globally and on the U.S. resulting from the stringent sanctions being applied to sectors of the Russian economy over the Ukraine war,” wrote Lawrie Williams, precious metals analyst with London-based bullion dealer Sharps Pixley.

While many economists expect the U.S. Federal Reserve to raise interest rates, possibly aggressively in early May, they also see risks that the world’s biggest economy could head towards recession, which would possibly dampen the rate rising cycle. Covid-19 lockdowns in China are also dragging on economic growth.

A climate of rising interest rates can reduce the attraction of non-yielding gold to investors.

The strong dollar is keeping a lid on the gold price, preventing it from testing $2,000 per ounce, several analysts said.

“Gold is receiving strong haven demand. But we see the same thing with the U.S. dollar. That will be a potential headwind for gold. The USD is being viewed as the ‘cleanest dirty shirt in the laundry.’ Investors are looking for safety outside of some of the chaos and uncertainty that we see in the markets. The argument is similar to gold — it is viewed as a trusted place,” Gainesville Coins precious metals expert Everett Millman told Kitco News.

Expectations of further rate increases by the Bank of England this year to tame inflation, may strengthen the pound against the dollar, making acquisition of gold more affordable for UK-based gold savers who buy in sterling.

Data released in April showed British consumer price inflation jumping in March to 7 percent, its highest level in three decades.