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Earlier, bullion jumped 2.2% after sanctions were imposed on the Bank of Russia to prevent it from using its foreign exchange reserves to ease sanctions. Some Russian lenders have also been locked out of the SWIFT messaging system that underpins billions of dollars in transactions.
In response to these sanctions, Russia’s central bank raised its key interest rate to its highest in nearly two decades and imposed some controls on capital flows in an effort to protect the economy as its currency weakens. was collapsing.
Concerns are now growing over whether the financial chaos could hurt global economic growth or require action by the US Federal Reserve to provide dollars.
Meanwhile, Russia’s central bank said on Sunday it would resume domestic gold buying after a two-year hiatus. It already holds more than 2,000 tonnes of bullion, making it the fifth largest sovereign owner.
“The purpose of buying gold (domestically) is to monetize it if necessary,” Nicky Shiels, head of metals strategy at MKS PAMP SA, wrote in a statement. Bloomberg Remark. “It is the fear of potential central bank selling that could weigh on the market.”
Gold is now on track for its best month since May amid tense geopolitical tensions, having outperformed other safe-haven assets. It will also be boosted by lower expectations of aggressive monetary tightening from the Fed to rein in the highest inflation in decades.
(With files from Bloomberg)