Gold climbs as sanctions fuel concerns of global hit to growth

Silver and platinum steadied, while palladium climbed 4.7%.
Image: Chris Ratcliffe/Bloomberg

Gold climbed as Western nations escalated sanctions on Russia for the invasion of Ukraine, heightening fears of a hit to global economic growth.

It surged as much as 2.2% at open after penalties were placed on the Bank of Russia to prevent it from using foreign reserves to blunt sanctions. They also excluded some Russian lenders from the SWIFT messaging system that underpins trillions of dollars worth of transactions.

The central bank raised its key interest rate to the highest in almost two decades and imposed some controls on the flow of capital in a bid to shield the economy as its currency plummeted. Concerns are now growing about whether the financial chaos may damage global economic growth or require action by the Federal Reserve to supply dollars.

Bullion is on course for its best month since May amid the fraught geopolitical tensions, having outperformed other havens. It will also be getting a boost from lower expectations of aggressive monetary tightening by the Fed to tame the highest inflation in decades.

Meanwhile the Russian central bank said on Sunday it would resume its gold purchases on the domestic market after a two-year pause. It holds over 2 000 tons in bullion already, making it the fifth biggest sovereign owner.

“The purpose of buying gold (in the domestic market), is to monetise it when required,” Nicky Shiels, head of metals strategy at MKS PAMP SA, wrote in a note. “It’s the fear over potential central bank sales that may overhang the market.”

Gold rose 0.5% to $1 899.03 an ounce at 9:23 a.m. London time, after earlier rising as high as $1 930.85 an ounce. Silver and platinum steadied, while palladium climbed 4.7%. It spiked as much as 7.8% earlier in the session on concerns about disruption of Russian exports, which produces about 40% of freshly mined supply.

© 2022 Bloomberg

COMMENTS   0

You must be signed in and an Insider Gold subscriber to comment.

SUBSCRIBE NOW SIGN IN

LATEST CURRENCIES  

USD / ZAR
GBP / ZAR
EUR / ZAR
BTC / USD

SEARCH COMPANIES
Enter company name or share code:

ECONOMIC DATA  

  CPIThe Consumer Price Index (CPI) measures monthly changes in prices for a range of consumer products Apr 2022 5.90%
  CPI ex OERThe Consumer Price Index excluding Owners’ Equivalent Rent (CPI ex OER) measures monthly changes in prices for a range of consumer products excluding Owners’ equivalent rent that measures changes in the cost of owner-occupied housing Apr 2022 6.40%
  RepoThe rate at which the Reserve Bank lends money to the country’s commercial banks and set by the Reserve Bank’s Monetary Policy Committee. May 2022 4.75%
  Prime lendingThe Prime Lending Rate is the rate of interest that commercial banks will charge their clients when issuing a loan (home loan or vehicle finance) May 2022 7.75%

Instrument Details  

You do not have any portfolios, please create one here.
You do not have an alert portfolio, please create one here.
INSIDER SUBSCRIPTION APP VIDEOS RADIO / LISTEN LIVE SHOP OFFERS WEBINARS NEWSLETTERS TRENDING

Follow us:

Search Articles:
Click a Company: